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TTK 



U. S. Money 



VS. 



S :■ ♦ ■«.« -.N .- ' ■.-. -vii r* 



Corporation 
Currency 

"ALDRICH PLAN " 



30 
ILLUSTRATIONS 



BY 

ALFRED OWEN CROZIER 



PRICE 25 CENTS 




SPECIAL OFFER 

TO OUR READERS 



J 



Public service instead of profit was the chief object of the 
author in publishing the astonishing facts in this volume. Its 
usefiilness depends on its circulation. Co-operation of all pa- 
triotic readers to that end is earnestly desired. Kindly help 
start an "endless chain" with your friends. 

THE BOOK OF THE HOUR 

*' U. S, Money vs. Corporation Currency" by Alfred Owen 
Crozier, a new work of facts, contains startling disclosures, doc- 
umentary proof of the great Wall street and bank conspiracy to 
control politics and comer the currency. Its exposure of 
the daring scheme of "high finance" should powerfully affect 
current political and financial history. The illustrations, all 
designed by author (executed by Fairbanks-Frey Engraving 
Co., Milwaukee), are eloquent. "The Magnet" a fascinating 
romance by the same author, was a high class novel extensively 
reviewed and widely read. It was preliminary to this volume, 
its plot being woven about the private central bank plan that 
since has become a dazzling reaUty. See press notices of " The 
Magnet" in back of this book. 

Price of **The Magnet,** sinsle copy; Cloth $1.00; Paper 50c. 
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THE MAGNET COMPANY 

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3 I '. y y 



r 9 



U. S. MONEY 



VS. 



CORPORATION 
CURRENCY 



"ALDRICH PLAN 



99 



WALL STREE7 
CONFESSIONS I 



GREAT BANK COMBINE 



By 

ALFRED OWEN CROZIER 

Author of the financial novel, **Th€ 

Cindnnati, Ohio 



THE MAGNET COMPANY 



PROVIDKNT BANK BUILDING 
Cincinnati, Ohio 



Copyright, 1012 
By 

Alfred Owen Crozier 



dfi8 

Printed and Bound 
Br 

M. A. DONOHUB & CO. 

Chicago 



»• 



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¥ 



9ii 



Srtierntit ($m?n S. H CHrozttr 



f Now nifwtytwo ytait of Afe with dear 
mind whole whole life has been anunseUnh 
public service, this vohime is eflfectioneiely 
inscribed by his son» the author. 

If Before the Civil War he and his good 
wif^ Maria P. A. Crozier, who went to 
her final rest this year, were zealous for abo' 
lition of human bondage. During the '70s 
th^ joined the movement to resist the grow 
ing aggression of Wall Street and the big 
banks and preserve the life and integrity of 
government money. 

1 Autfior,bom in midstof civil conflict 1163, 
now gladly takes up the struggle ih^ pio' 
neered. Surely there can be no more in^ 
spiring mission than to fight for the things 
abaoluie^ necessary lo conserve popular 
government and preserve the ReptMic's ltfio> 



' ■■ -si. 



ILLUSTRATIONS 

CHAPTER PAGE 

1. Frontispiece — ^The Octopus — "Aldrich Plan." 

2. The Beacon — Liberty — ^Rule by the People • . 10 

3. Poisonous — "Snakes" in the Aldrich Bill . • . . 21 

4. National Reserve Association Executive 

Committee — In Session 42 

5. The Executioner — "Aldrich Plan" 50 

6. Profits Divided — "A Friendly Game" 67 

7. The Magnet — ^All Money Drawn to Wall Street . 73 

8. A Billion Liability — Is Government Obligated? 95 

9. Elasticity — but— Who'll do the Stretching?. , . 103 

10. Cause OF High Prices — Banks are the Cause. . . 109 

11. Financial Bubble Factory — Printing-press 

Money 116 

12. National City Bank— In Wall Street 120 

13. Quo Vadis — ^Aldrich vs. Andrew Jackson .... 147 

14. New York Chamber of Commerce — ^Where Cen- 

tral Bank Scheme was hatched . 155 

15. A Confidence Game — ^Wall Street Fooling the 

Banks 165 

16. The Conspirators — ^W^l Street and the Big 

Banks 181 

17. Tale of the Tape — ^A Stock Exchange Ticker. . 18^ 

5 



ILLUSTRATIONS— Contiiiued 

CHAPTER PAGE 

18. New York Stock Exchange — In Wall Street. . 195 

19. America's Panic Factory— Wall Street's Stock 

Exdiange — Panic in Progress 201 

20. Cash Controls Credit— Steel Trust's $75,000,000 

Cold Cash in Banks 211 

21. Big Banker — ^Who Repudiated, Now Grabs at 

Public Currency 214 

22. Money is Power — ^T wo Living Americans. . . . 223 

23. World's Bonded Debt $39,000,000,000.00 ... 227 

24. Rothschilds — Cornering the Earth ...... 238 

25. Bankers Fight President Lincoln — Demand 

Double Profits 245 

26. Fifty Years of American History — ^Banks vs. 

Government 276 

27. Uncle Sam Blocks the Game — ^Aldrich Bill. . . 289 

28. Justice Must be Impartial — ^Lawless Bankers 

and Labor Leaders 301 

29. Square Deal Banking — Uncle Sam to the Bankers 308 

30. Political Tug of War — ^Progressives — Current 

PoUtics 312 

31. "White Man's Burden"— Bank Incubus on U. S. 328 

32. U.S. Monetary Council— The New Plan. ... 336 

33. New York City— Wall Street District 350 

34. CottiNG Central Money Trust— WaU Street to 

Drive All Banks and Business 372 

6 



CONTENTS 



CHAPTER PAGE 

I. Central Money Trust. A warning. Wall 
Street and Big Banks promoting "Aldrich 
Plan." Patriotic Bankers are fighting the 
measure. Will this new issue create a new 
party — ^the National Progressive Party? 
"Shall the people rule" — ^theirmoney supply? 7 

II. The Aldrich Plan. Commission's pending 
bill, each section analyzed. Amazing and 
dangerous "jokers." 24,392 banks legally 
tied together in great money trust for 50 
years 20 

III. Pooling the People. Bank reserves to be 
left in Wall Street, not put in "Central 
Reservoir" . 6» 

rV. A Discovery. Government to be liable on a 
billion corporate currency? Conflicting 
statements by big banks and monetary Com- 
mission's members. Letters. What's the 
game? 78 

V. Inflation and Contraction. Cost of living 

and prices go up. Why? 97 

VI. Frenzied Financing. A billion dollar corpo- 
ration to be formed without investment of a 
dollar. Greatest feat of financial legerde- 
main in all history. The mystic power ex- 
plained 112 

7 



CONTENTS— Contiiiued 

CHAPTER PAGB 

VII. Confession of Wall Street. Original let- 
ters of big banks and financiers. Great 
bank — Wall Street Conspiracy. Complete 
documentary proof 118 

VIII. Wall Street's First and Second "Plans." 
Aldrich's Central Bank Scheme of, by and for 
high finance. Full proof. Documents. Inside 
history. Rothschilds of Europe. Interna- 
tional Money Combine to control the world. 146 

IX. A Confidence Game. Banks victimized by 
Aldrich Plan. Just what banks get and 
must give — shown. State banks and Trust 
Companies hard hit 164 

X. A Central Bank TO be Bought? $1,000,000 

"promotion fund" raised 180 

XI. Wall Street Stock "Market." A "fixed" 
Monte Carlo. The game exposed in detail. 
U. S. Attorney-General's strange opinion. . 185 

■ XII. Panics Natural or Artificial? Inside facts 

about 1907 panic 201 

■ XIII. Money is THE Power. Secrets of high finance 

exposed. Steel Trust's $75,000,000 cash. 
The real money trust. Heart of the Trust 
problem 209 

XIV. The Slavery of Debt. Mortgage on htiman 

race 39 billions. Warning to American Jews. 226 

XV. History of National Banking System. As- 
tonishing official record revealed. Political 
and legislative intrigue. Gold standard and 
free silver campaigns. Corruption and law- 
made profits. Banks fight government 
money, want bank currency. Livestigation 
imperative , . . 242 

8 



CONTENTS— Contiiiued 

CHAPTER PAGE 

XVI. Bank Graft and Crime. U. S. comptroller's 
terrible official charges against bankers. His 
report quoted. 69 per cent of all National 
Banks guilty 282 

XVII. Crime of Conspiracy. 40,000 bank officers 
and directors each liable to $10,000 fine and 
two years imprisonment. Law is plain and 
evidence abimdant. Same offense for which 
the union iron workers have been arrested 
by the government. Supreme court decis- 
ions cited 292 

XVIII. Bank Credits vs. Government Currency. 
Cash basis. High cost of living. Bank tax 
on business and consumers 304 

XIX. The Legal-tender *'Joker.'' A new pro- 
gressive party? National City bank letters. 
"Lawful money" and ''Legal Tenders" de- 
fined. Government money vs. corporate 
currency 311 

XX. Reorganizing the Money Supply. New 
system, government money secured by gold, 
instead of unlimited optional, non-legal 
tender corporate currency 327 

XXI. U. S. Monetary Council. A new currency 
and banking plan. Public Institution, in- 
stead of Aldrich's private corporation. 
"People shall rule" — ^their rnoney supply. . 336 

XXII. The Octopus. Coming incorporated Money 

Monster 344 

Appendix. Lsttbrs to Prebidbnt Taft by Author. 
Position of present administration on the 
Aldrich Cealxal Bank plan. Surprising in- 
' side facts made public ........ 358 

Governor Harmon's Position 390 



» ." 



LIST OF LETTERS 

CHAPTER PAOB 

1. Crozier to President Aldrich, Nov. 21, 1911 • . . 78 

2. Crozier to Monetary Commission, Feb. 3, 1912 . 79 

3. A. Piatt Andrew, Asst. Sec'y U. S. Treasury, to 

Crozier, Jan. 29, 1912 80 

4. Congressman John W. Weeks (member Monetary 

Comm.) to Morris N. Webb, Feb. 12, 1912 . . 82 

5. Former U. S. Senator .H. B. Money (member 

Monetary Comm.) to Crozier, Jan. 30, 1912. . 83 

6. Congressman Edward B. Vreeland (Vice-Pres. 

Monetary Comm.) to Crozier, Jan. 30, 1912. 84 

7. Congressman Vreeland to Crozier, Feb. 9, 1912. . 86 

8. Crozier to Congressman Vreeland, Feb. 20, 1912 . 88 

9. Crozier to National City Bank of New York, Nov. 

20, 1911 122 

10. National City Bank of New York to Croaoer, Nov. 

24,1911 123 

11. National Bank of Commerce in New York to Cra» 

zier, Jan. 3, 1912 129 

12. Continental and Commercial National Bank of 

Chicago to Crozier, Nov. 29, 1911 132 

13. J. P. Morgan & Co. to Crozier, Nov. 28^1911 , . . 133 

14. NewYoricClearingHousetoCrozier,Nov.29,1911 134 



LIST OF LETTERS— Ck>ntiiiiied 

CHAPTER PAQB 

15. New York Stock Exchange to Crozier, Nov. 28, 191 1 134 

16. New York Chamber of Commerce to Crozier, Nov. 

28,1911 136 

17. Fourth National Bank of New York to Crozier, 

Nov. 24, 1911 138 

18. Union Trust Company of New York to Crozier, 

Nov. 29, 1911 138 

19. American Bankers Association to Crozier, Dec. 27, 

1911 140 

20. New York Life Insurance Company to Crozier, 

Nov. 28, 1911 141 

21. Crozier to U. S. Comptroller, Dec. 8, 1911. ... 262 

22. U. S. Deputy Comptroller to Crozier, Dec. 12, 1911 283 

23. Crozier to National City Bank, Nov. 26, 1911. .319 

24. National City Bank of New York to Crozier, Nov. 

29, 1911 320 

• » 

25. National City Bank to Crozier, Dec. 15, 1911. . 323 

26. PresidentTaft'sSecretarytoCrozier,Nov.l6,1911 357 

27. CroziertoPresidentTaft,Nov. 10, 1911 368 

28. President Taft's Secretary to Crozier, Aug. 23, 1909 374 

29. Crozier to President Taft, Aug. 20, 1909. .... 375 

30. New York Life Insurance Company to Crozier, 

Dec. 26, 1011 383 

(See aflSdavit on next page.) 

n 



.i' *• 



AFFIDAVIT 

S>VORN PROOF AS TO 



StttU •r Viseontin ) 

) 
) •• 

) 
Count jr 0/ llll»«ul«« ) 



August Fr«y, of the Biir^arUr8«9r«y Sngravini Co»p«ny, 
VU«auke« , Viaoontin , IwvlDg bcon duly •worn s^ys 

That he c«r«fUUy excalntd the originle of Che 
ftietogrephloaUy repreAioed tetters priilted in Alfred 
Owen Cresler'e new boon, *U. 6. Money vs Corporatioa 
Ourreney* and that hie rtni made the phetograpbio 
reproducttoae and cute of eald letters as eho«n In 
eald voluoe and that eane are accurate and genuine. 




•lAaorl^ed and evern to before at this 89th day 
•f nay, 1912 




jZ^ /tS(^^ ^^ f^TT I 




Om/ £!rv«A4. 



^4 



CHAPTER I. 
CENTRAL MONEY TRUST, 

A Wanung. Wall Street and Big Banks Promoting the ''Aldricli 
Plan/' Patriotic Bankers Are Fighting tke Measure. ViVl 
This New Issue Create a New Political Party — the National 
ProgressiTe Party? ''Shall the People Rule*' — ^Their Money 
Supply? 

The New York Chamber of Commerce is conceded to be 
the confederated brains of all the great interests of Wall 
Street. It was founded April 5, 1768. It is dominated 
by the masters of high finance and is the official voice of 
Wall Street on governmental action and financial policies/ 
Frank A. Vanderlip, president of Standard Oil's National 
City Bank, and others comprised the ''Special Currency 
Committee" of the Chamber. Its exhaustive report, adopted 
by the Chamber October 4, 1906, is given in this volume. It 
advocated a great Central Bank or Association with the 
identical powers and functions proposed for the National 
Reserve Association under the pending "Aldrich Plan." 

Wall Street's Own Views ! 

Describing the precise power such a central financial 
institution issuing and controlling the volume of the public 
currency and fixing the discount or interest rates would 
have, such report significantly says: 

''By the control of its rate of interest and of its 
issues of notes it would be able to exert great influence 
upon the money market and upon public opinion. Such 
power is not possessed by any institution in the United 
States/' 

This was a heart-to-heart talk by the committee with the 
other great financial leaders to induce them to join in pro- 

7 



8 UNITED STATES MONEY vs. 

moting the scheme. It was showing them truthfully the 
power such an institution would put into the hands of those 
controlling same. The report bluntly said that such central 
institution not only could control the "money market," but 
also the "public opinion" of the United States, by arbitrarily 
increasing and decreasing interest rates and inflating and 
contracting its circulating notes, or currency. This power 
to increase and decrease the supply or quantity of money and 
credit, and the interest or price charged for same, is the 
power of absolute life and death over the 24,392 banks 
and the business of every individual and corporation in the 
United States. If carried to extremes it would cause general 
panic, disaster, bankruptcy and ruin. By this means it 
could at will raise and lower the prices of all securities, 
property and human labor. The committee truthfully said : 
"Such a power is not now possessed by any institution 
in the United States." Even the Federal Government itself 
has no such enormous and dangerous power. It is power to 
do all these things that Wall Street seeks. With it, the few 
who will control this private corporation easily can soon 
own the entire republic and its 94,000,000 inhabitants in 
fee simple. 

The pending Aldrich measure by far is the most daring 
and dangerous scheme ever introduced into Congress. Any 
unprejudiced person will so conclude from the plain evi- 
dence writer has accumulated by years of effort and thou- 
sands of dollars of expense, and now gives to the public in 
this volume. The facts are official and incontrovertible. 
They are documentary, from the public records, and letters 
of the biggest banks and financiers in the country; also 
conflicting letters from various members of the Monetary 
Commission. The originals all are now in writer's posses- 
sion. It is earnestly hoped that publicity of the true inward- 
ness of this evil measure will render some public service by 
warning the people of their approaching danger. 

It is certain that the bill will become law and fasten upon 
the country for fifty years this great incorporated money 



CORPORATE CURRENCY 9 

trust unless the rank and file of the people take matters into 
their own hands. The Wall Street and bank combine are 
now dickering for support with the management of both 
parties. It is said to be offering to finance the campaign of 
both sides if friendly candidates are nominated, and a real 
investigation of the "money trust" is prevented. It is will- 
ing to spend millions, because the play is for future billions 
and the political control of the republic for the next half 
century. 

The people can defeat the measure only by making it the 
leading public issue in the 1912 campaign. It will be the 
secret issue anyway, engineered by Wall Street and the 
banks. The plan is to keep down all discussion in Congress 
or the campaign prior to election and then force the bill 
through Congress under whip and spur before the expira- 
tion of the present session and presidential term March 4, 
19 1 3, or later, if the "interests" control the nomination and 
election in 1912. The people should publicly pledge every 
delegate, candidate and convention. Take no man high or 
low for granted. Count as secretly pledged to the bill 
every man refusing to declare against it publicly. There will 
be no neutrals. Talk with your friends and neighbors and 
beg them to immediately join in this fight. The entire money 
supply is at stake. Your business and the welfare of your 
family is involved. The issue will be : "Government Money 
vs. Corporate Currency." Do the people want their 
Government to continue to issue and control the public 
currency ? Or, shall Congress grant to a mere private 
corporation owned by the banks controlled by Wall Street 
an absolute monopoly of the printing and issuing of all 
public currency? Remember, those who have power to 
make money scarce or plenty have power over the business 
of every man, the happiness of every home, to make or 
break, to confer or destroy general prosperity. It gives 
them a hunger-hold on every man, woman and child. Shall 
this autocratic power be granted without reservation, effec- 
tive regulation or restraint for fifty years to just one 



■ TO UNITED STATES MONEY vs. 



THE BEACON ofi HOPE 
70 AU THE WO/fLO 




I 



f^ 



SHALL Tff/SUGHrB£PUTOUr f> 

TH£'iiLOfl/CH PL/m/' IV/LL T£ND TO 
ABOLISH RULE BY TH£ PEOPLE AMO 
THUS oeSTWV AM£f)ICAN LIBERrY. 



CORPORATE CURRENCY n 

private corporation ? Even the suggestion is criminal I Yet, 
there is serious probability of its being done. Wall Street 
and the banks feel sure of it, and generally they know. 

The people can kill the scheme. But will they do it? 
Public sentiment, lashed to indignation and fury by knowl- 
edge of this dangerous and daring legislative "hold-up," 
can smash the entire conspiracy. But will the people wake 
up; will they realize their peril and act in time? It must 
be war! 

If the Aldrich measure is passed it cannot be repealed. 
It will be a contract, a "vested right" for fifty years; 
94,000,000 Americans and all their interests will by act of 
Congress be put in financial and political bondage for a 
half century to a cold, calculating, merciless, greedy and 
soulless incorporated money power — z, central money trust. 
We are at the "parting of the ways." Shall the country 
hereafter be ruled by the people, or by a single private 
corporation ? 

To a greater extent than during any national crisis since 
1776, the life of the republic is now in danger! 

Banks Promoting Aldrich Scheme. 

The American Bankers' Association at New Orleans in 
November, 191 1, by resolution officially committed itself and 
the banking fraternity to the Aldrich private central bank 
plan. This makes it proper and necessary to examine and 
publish the history and record of the national banking 
system and the conduct of bankers generally. Only in this 
way can the country determine whether it is safe by law 
to turn over to a private corporation owned by the banks a 
monopoly for fifty years of the entire public currency 
and the other enormous powers granted by the Aldrich 
bill. By seeking thus vastly to increase their profits and 
power by act of Congress the banks have made them- 
selves and their practices a public political issue. Therefore 
startling facts about banks and bankers will be revealed 
herein plainly and without bias or apology. 1 



12 UNITED STATES MONEY vs. 

Wealth honestly and fairly gained by individual effort^ 
whatever the size, may put upon the owner a public re- 
sponsibility, but no stigma. It should receive the full pro- 
tection of the law. But law-made wealth, that obtained, 
improperly by private interests through acts of Congress or 
State Legislatures, if it tends to increase the burden upon 
the people for the profit of the few, should be either con- 
fiscated or strictly regulated for the public benefit. This 
line of distinction between law-made and individually eamed. 
wealth should ever be kept in mind. 

No honest person will be prejudiced against any man 
simply because he is a banker, or rich. On the other hand,, 
because a man is a banker, rich and powerful, is no reason 
why he should be shielded or feared if he has been guilty^ 
of graft, fraud and criminal conduct. Writer's brother and 
many of his personal friends are bankers, so he has no class 
prejudice whatever. But a deep sense of duty impels the 
publication of the official evidence conclusively proving the 
existence of a great and dangerous conspiracy between 
Wall Street and the big banks for the creation of a giant: 
central money trust that in time through the 24,392 banks 
and their grip on all business will rule the republic and 
destroy genuine popular government. 

The gold standard no longer is an issue. It is firmly and 
permanently established. The silver question is gone for- 
ever. And no one wants fiat paper currency or irredeemable: 
greenbacks. But the action of Wall Street and the big 
banks has precipitated on the country a new financial 
and political issue more important to the people than alt 
former financial issues combined. There are two branches 
to this one new issue: 

I. The trust question. Shall Congress take from Gov- 
ernment and the people all power to issue and regulate the 
quantity of the public currency and grant it unreservedly 
for fifty years to a private corporation controlled by the- 
big banks owned by Wall Street? Shall it by law create 
and turn loose for half a century a huge incorporated central! 



CORPORATE CURRENCY i$ 

money trust in private hands to monopolize and control 
without any effective regulation or restraint the country's 
entire supply of money and bank credit ? 

2. The money question. Shall the future currency of the 
country be full legal tender ("lawful money'*), the direct 
obligation of the Government, redeemable on demand in 
gold, secured by a reserve of at least one-third the volume 
in actual gold, issued through the banks on fair but business- 
like terms under strict legal regulations by a great and in- 
dependent public institution so created as absolutely to 
exclude all Wall Street and political control? Or, shall it be 
as proposed by the Monetary Commission, a partial legal 
tender (not "lawful money") corporate paper currency, 
the mere obligation of a private corporation and not guar- 
anteed by the Government, issued for private profit without 
legal limit as to quantity by a corporation controlled by the 
big banks owned by Wall Street? Shall it be Government 
money, or corporate currency? 

Around this new financial and trust issue soon will be 
waged the greatest political contest since the Civil War. 
It touches the pocket-interest of every citizen. The people 
will be on one side and the "special interests" on the 
other. It will be a finish fight. The victors will rule the 
republic for all future time, the vanquished being sub- 
servient. 

It is history that no question so interests and stirs the 
American people as does the money issue. They are intel- 
ligently and wisely jealous of their money supply. In- 
stinctively they realize that whoever controls money and 
credit, the life-blood of all business, soon can control every- 
thing else, including government itself. Therefore the 
people will fight to the last ditch to retain in their govern- 
ment control of the issuance and volume of the public 
currency. 

Party lines are likely to be shattered and perhaps de- 
stroyed. If the present efforts of the promoters of the 
Aldrich scheme to control the nominations and policies of 



14 UNITED STATES MONEY vs. 

both parties are successful, the progressive and patriotic 
men and women of both parties may come together on this 
great issue, form the National Progressive Party, and in 
a whirlwind campaign sweep the country. Broadly, it is the 
same old issue, "Shall the people rule?" 

The contents of this volume is not an attack upon in- 
dividual bankers or banks as such or upon Wall Street and 
its financiers. It is only intended to lay bare the defects 
and evils of the present financial and banking systems in the 
hope that by informing the people it will aid them to defeat 
the unpatriotic and dangerous Aldrich scheme that would 
financially and politically enslave for fifty years the banks, 
all American business and the 94,000,000 people of the 
United States. 

It is possible that slight errors in the large amount of 
data and figures herein produced have escaped author's 
notice in the short time allowed for its preparation, but in 
all essentials it will be found substantially accurate and 
reliable, the sources of the astonishing official evidence being 
given, date and page. 

This volume is not intended to be a scientific and technical 
financial treatise. It is chiefly issued to expose the dangerous 
designs of high finance and increase popular knowledge, 
thought and discussion. 

"U. S. Money vs. Corporation Currency" is a book of 
pregnant facts. Author's financial novel, "The Magnet," 
was preliminary. That volume, written in 1906 and the 
early part of 1907, although in form of fiction, is almost 
an exact history in every detail of subsequent and current 
financial and political events. Its plot is woven around the 
identical private central bank scheme reported to Congress by 
the Monetary Commission on January 8, 1912. The chapter, 
"The Artificial Panic," is a history of the panic of 1907, and 
yet it was all in type long before the panic occurred. These 
facts are here mentioned only to show the accuracy of the 
information obtained by author from Wall Street sources 
in 1906 that high finance and the big banks were about to 



CORPORATE CURRENCY 15 

promote a great central bank trust that would be a huge 
money nx>nopoly, taking away from the Federal Govern- 
ment and putting into private hands all control over the 
issuance and volume of the public currency. 

Writer then believed, and does now, that if Congress 
creates such an institution it will be the beginning of the end 
of real popular government. Therefore he deliberately 
began the campaign that already has occupied five years to 
alarm the people and make them suspicious of Wall Street 
and the high finance banks that he knew then were secretly 
promoting the dangerous scheme and soon would bring it 
into the open and try to drive it through Congress. For that 
reason he wrote "The Magnet." For that purpose he at- 
tended the currency conference of the National Civic Fed- 
eration in New York on December 16, 1907, and there 
openly denounced the program of high finance and obtained 
from the prominent Wall Street bankers present the im- 
portant public admission that they sought to obtain private 
control of the public currency. Other similar steps have 
been taken from time to time, and now that the measure 
actually has been introduced into Congress and the lines 
are being formed for a final mighty struggle between the 
people and the "interests" over the ccxitrol of the nation's 
entire supply of money and credit, this new volume and its 
serious contents is given to the public in the hope that it 
may aid the people in their unequal fight for financial, in- 
dustrial and political independence against the most power- 
ful nation-wide combine ever formed to accomplish the 
selfish conquest of a republic. 

Patriotic Bankers Oppose Measure. 

Fortunately there are many honest and patriotic bankers 
who refuse to barter away the interests of their customers, 
neighbors and friends and the welfare of their communities 
and the nation for a little more profit that they do not 
need. The number of bankers opposed to the Aldrich bill 
will increase as they come to realize the dangerous character 



i6 UNITED STATES MONEY vs. 

of the measure. They will see that the alternative plan 
herein proposed confers all the benefits claimed for the 
Aldrich plan, but avoids the very apparent grave evils. 

Andrew Jay Frame, president of Waukesha National 
Bank, ex-president of the Wisconsin Bankers' Association, 
and now a member of the Executive Council of the Ameri- 
can Bankers' Association, is recognized generally as a 
financial authority, speaker and writer, of the highest na- 
tional standing. He is not a radical, but a strict 
conserative. He is utterly opposed to the pending Aldrich 
central bank bill and considers it not only unpatriotic 
and evil, but highly dangerous to the banks; and in 
unmeasured terms he denounces the means being used to 
promote the measure through Congress and the gag rule 
methods employed at New Orleans to force approval of the 
Aldrich scheme by the American Bankers' Association. 

In an address, "Diagnosis of the National Monetary Com- 
mission Bill," made on March 5, 1912, before the Bankers 
and Business Men's Club of Memphis, Tenn., Mr. Frame 
denounced the pending Aldrich bill as opposed to indepen- 
dent banking, a move to create a great banking or money 
monopoly, a scheme for wild and dangerous currency and 
credit inflation certain to react on the banks and the country 
in the shape of frequent panics following periods of ex- 
cessive expansion and speculation, and that the proposed 
remedy is worse than the claimed disease. He said he was 
invited to present the revised Aldrich plan to the American 
Bankers' Association at New Orleans for its approval, but 
refused to stultify himself by doing so. He favors a more 
elastic currency system, chiefly for emergencies instead 
of rediscounting for the convenience of banks in normal 
times, and urges centralization of bank reserves in one in- 
stitution, but only for protective purposes. He says any 
solvent bank can now easily rediscount or sell at another 
bank any good paper. He warns the banks and the country 
in effect that destruction of the independent banking system 
and substitution of the Wall Street branch banking plan 



CORPORATE CURRENCY 17 

-that means ultimately a universal banking trust to control 
the cash and credit of the entire country is the real aim and 
object of the pending Aldrich measure. 

He further said: 

"Senator Aldrich submitted an amended tentative plan, 
just before the American Bankers' Association met in New 
Orleans in November. Without waiting for the bankers 
to calmly and deliberately digest the subject, as has been 
the custom for ten years past under ring control the steam 
roller worked overtime and an *ex-parte' miscarriage of 
Justice occurred. 

"A bombardment of attorneys for the prosecution with 
no one invited to defend took place. Another 'unqualified' 
indorsement of the new plan passed with only one *No,' 
even if others for divers reasons failed to vote at all. I 
simply cite these facts not to air them in public, but to 
show the Congress the undignified and unfair methods pur- 
sued by the powers that be in the great American Bankers' 
Association. 

"I again assert that if the American Bankers' Association 
is to preserve its usefulness, it will overturn ring control 
and make an open forum for fair discussion by both sides 
to any controversy and let the majority rule. * * * 

"Further, I appeal to the intelligent bankers of the coun- 
try, even if the bill is complex, to ponder carefully this 
analysis before swallowing the bait, hook and all, as it takes 
ten years after the bill is passed to amend it in any manner. 
Remember *an ounce of prevention is worth a pound of 
cure.* Do not sleep in the confident peace that your in- 
terests will be fully safeguarded by the Currency Committee 
of the American Bankers' Association. It is a well known 
fact that the guiding spirit of this committee, if in his 
power, would crush the independent banking system and 
substitute therefor branch banking and asset currency. The 
balance of the committee heretofore seems to have ac- 
quiesced. 

" * * * tends toward a monopoly that sooner or 



l8 UNITED STATES MONEY vs. 

later a second Andrew Jackson will throttle. * * * 

"The world is now agitated over high prices partly caused 
by the wonderful production of gold in the last twenty-five 
years, which has exceeded in quantity the world's gold 
production since the discovery of America. In view of this 
it is our bounden duty to limit running the printing presses 
to supply a fictitious substitute, except in emergencies to 
prevent the paralyzing effects of cash suspension by banks. 
Heed the warning or compound the trouble. 

"Therefore, give us a reserve bank that will be our servant 
and not our dictator. * * * Give us a bank that under 
no circumstances will undermine our independent banking- 
system, or serve to inflate either currency or credit. To 
quote an eminent authority, *we certainly cannot cure de- 
fects by opening numerous doors to additional dangers.' " 

This terrific indictment of the Aldrich private central 
bank scheme, and the high finance "ring" or clique running- 
the American Bankers' Association that is said to have 
joined with Wall Street in a great conspiracy to force the 
sinister measure through Congress, is significant. It is 
made by a gentleman who for fifty years has been an emi- 
nent banker and actually is now a member of the Executive 
Council of the American Bankers' Association. But he is of 
that independent and patriotic class of bankers who put the 
welfare of the community and the nation first. He is not 
one of those modern fly-by-night high finance bankers who 
have seized control of big institutions containing vast ac- 
cumulations of the deposit savings of the people which they 
freely use legally and illegally to bolster up their high 
finance flotations and gambling ventures that rob the people, 
endanger the solvency of the banks and menace the whole 
country with frequent panics that their practices cause or 
intensify. 

If the Wall Street element for ten years has maintained 
"ring control" and flattened all opposition with the "steam 
roller" in the American Bankers' Association representing 
every bank in the country, when each bank has had an 



CORPORATE CURRENCY 19 

equal voice, as Mr. Frame declares, will not the same ele- 
ment establish "ring" rule in the National Reserve Associa- 
tion where each bank does not have equal power, but only 
in proportion to the size of its capital stock, a Wall Street 
$25,000,000 bank owning one thousand times as much asso- 
ciation stock as the $25,000 country bank. The central bank 
is rigged to rule absolutely each of the 24,392 National and 
State banks and trust companies, the big banks will control 
the central bank and Wall Street owns the big banks. Thus 
will high finance obtain mastery over every bank and through 
the banks of all American business and establish a central 
money trust to legally comer and control for private profit 
every dollar of public currency and the bank credit of the 
whole United States for the next fifty years. It is to be a 
trust of the trusts, with imperial powers that will make it 
absolute dictator for half a century of all American finance, 
industry and politics. 

Then we shall have only corporate currency, and a gov- 
ernment of the corporations, by the corporations and for 
the corporations — a "soulless" corporate republic. 



CHAPTER II. 
/THE ALDRICH PLAN. 

The Bill in Full Reported to Congress by Monetary Connission 
Analysed. Amazing and Dangerous "Jokers." 24»392 Banks 
LegiJly Tied Together in Great Money Trust for 50 Years. 

The bill attached to the National Monetary Commission's 
report to Congress made January 8, 1912, now pending, is 
herein printed in full. After each section the comments of 
writer analyzing the measure will be found. Only a few brief 
points are so made, because the entire contents of this 
volume in one way or another bears on some feature of the 
bill, or on subsequent conditions likely to prevail if the 
measure becomes law. Comparison of its provisions with 
those of the two plans for a central bank originated by 
the New York Chamber of Commerce, one in October, 
1906, and the other in January, 191 1, reproduced elsewhere 
in this book, will conclusively show that the proposed func- 
tions of the National Reserve Association and of such cen- 
tral bank are practically identical. The chief material change 
since 1906 is in the management or control. In 1906 Wall 
Street only proposed a Government Central Bank with the 
Federal Government in absolute and supreme control. In 
1912, emboldened by the panic of 1907 and its results, and 
belief that the Administration and Congress can be induced 
to entirely surrender to Wall Street and the banks, it is 
now actually demanded that Congress create a Private Cen^ 
tral Bank named "National Reserve Association," with the 
banks in absolute and supreme control, the Government 
selecting 4 and the banks 42 of the 46 directors. The gov- 
ernmental function of issuing and regulating from day to 
day the volume of the entire public currency, that in 1906 
was to be granted because it was to be a public institution 
under absolute Government control, is now to be delegated 
to and exercised by this mere private corporation. 

The Aldrich plan bill is as follows: 

20 



CORPORATE CURRENCY 



A DANGEROUS 
'^NAHE^'/NMOSr 

ormssQSECT/om 

OF THE ALDRtCH 
BfLL. 



A BILL 

To Incorporate the National Reserve Association of the 
United States, and for Other Purposes. 
Be it enacted by the Senate and House of Representatives 
of the United Siates of America in Congress assembled, That 
the National Reserve Association of the United States be, 
and it is hereby, created and established for a term of 50 
years from the date of filing with the Comptroller of the 
Currency a certificate of paid-in capital stock as herein- 
after provided. It shall have an authorised capital equal 
in amount to so per centum of the paid-in and unimpaired 
capital of all banks eligible for membership in said Natiotml 



02 UNITED STATES MONEY vs. 

Reserve Association, Before said association shall he tm- 
thorised to cofhmente business $200,000,000 of the capital 
stock shall be subscribed and $100,000,006 ofAts capital shall 
be paid in cash. The capital stock of said association shall 
be divided into shares of $100 each. The outstanding capital 
stock may be increased from time to time as subscribing 
banks increase their capital or as additional banks become 
subscribers or may be decreased as subscribing banks reduce 
their capital or leave the association by liquidation. The 
head office of the National Reserve Association shall be lo- 
cated in Washington, in the District of Colimibia. 

June 7, 191 1, the 24,392 reporting national and state 
banks and trust companies had a combined capital stock 
of $1,952411,085. 

If all joined, the reserve association* stock would be about 
$400,000,000. That size capital is "authorized" whether 
they all join or not. The figure is 20 per cent of combined 
capital of "all banks eligible for membership." If only 
the 7,331 national banks join, their combined capital on 
October 31, 191 1, being $1,032,632,131, the total reserve 
association stock will be about $200,000,000, the amount 
that must be "subscribed" (one half being paid in) before 
the association can "commence business." Evidently when 
the $200,000,000 minimiun was fixed, it was anticipated 
that probably only national banks would join ; and possibly 
such state banks and trust companies as are directly con- 
trolled by national banks. Although there is no important 
advantage to be gained by state banks and trust companies 
by joining, and very serious disadvantages, it was necessary 
to make a show of impartiality to keep state institutions from 
fighting the scheme in Congress. Apparently state institu- 
tions can join or not, as they like. Subsequently, however, 
they will be forced to surrender and become a minor part 
of this universal banking trust or see their deposits and 
business gradually diverted to national banks by the cry that 
only such banks as join the association have been made 
"panic-proof" by the Government. Once the law is passed, 
every bank can be forced into the combination; and once 
in they are powerless and never can get out, except by 
insolvency or liquidation. If necessary, another little panic 
easily can be sprung as an "object^ lesson" to accelerate the 
decision of all banks to join this salvation corporation. 
Elsewhere we shall see that every bank joining must in 
everything submit to the orders of the central bank. A 



CORPORATE CURRENCY 23 

universal bank trust — a great money combine-yis certain 
the moment Congress passes and the President approves 
this bill. The President has indicated that he will approve 
it, so Congress is the only protector of the country and 
the people a|:ainst the imperial money tnonster lliis bill 
would bring mto being. And the "interests" believe they 
can control a majority of the present Congress. If they can, 
then only the people can block the measure. The total 
capital of this financial colossus, and its power, is to auto- 
matically increase as new banks are organized or old banks 
increase their stock. Congress having no voice in the matter 
during the next 50 years. While the official head-office is 
to be in Washington, of course the real headquarters will 
be at the New York Branch in Wall Street. The moment 
this bill becomes law it will be an enforceable contract, a 
"vested right," that neither Congress or any other authority 
can cancel or change to the financial disadvantage of the 
corporation. A member of the Monetary Commission so 
stated to writer recently. 

Sec. 2. Upon duly making and filing with the Comp- 
troller of the Currency the certificate hereinafter required 
the National Reserve Association of the United States 
shall become a body corporate and as such and by that 
name shall have power — 

First. To adopt and use a corporate seal. 

Second. To have succession for a period of 50 years from 
the date of said certificate. 

Third. To mak^ all contracts necessary and proper to 
carry out the purposes of this act. 

Fourth. To sue and be sued, complain and defend, in 
any court of law or equity, as fully as natural persons. 

Fifth. To elect or appoint directors and officers in the 
manner hereinafter provided and define their duties. . 

Sixth. To adopt by its board of directors by4aws not 
inconsistent with this act, regulating the manner in which its 
property shall be transferred, its general business conducted, 
and the privileges granted to it by law exercised and en- 
joyed. 

Seventh. To purchase, acquire, hold, and convey real 
estate as hereinafter provided. 

Eighth. To exercise by its board of directors or duly 
authorized committees, officers, or agent, subject to law, 
all the powers and privileges conferred upon the National 
Reserve Association by this act. 



24 UNITED STATES MONEY vs. 

This lax-wild-cat form of incorporation is enough to 
make corporations under the laws of New Jersey, Delaware 
or Arizona turn green with envy. It was not considered by 
the fathers safe to allow even the Federal Government to 
exercise any functions or powers except such as were dele- 
gated to it by the States and specifically enumerated in the 
Constitution, even with the people constantly in control 
for the benefit of the people. This private corporation 
owned by the banks for the benefit of the banks is granted 
life for 50 years, a half century, almost half as long as 
the republic has existed, and it is practically g^ven legal 
power to do anything and everything without limitation, 
restraint, regulation or serious government supervision, ex- 
cept as to a few minor and relatively unimportant things 
specifically mentioned. No public regulation or supervision 
of its investments or conduct is provided. Paragraphs 
"third," "sixth" and "eighth" grant the corporation prac* 
tically unlimited power and turn it loose to work its will 
and pleasure for 50 years. Granting its board of directors 
this wide-open power to "adopt by-laws" is giving the cor- 
poration legal authority for 50 years to legislate for itself 
on all subjects not expressly illegal, except that such by- 
laws must be "not inconsistent with this act." The uncon- 
ditional grant of power "to make all contracts necessary 
and proper to carry out the purposes of this act" enables 
it to do practically everything ; for almost anything can be 
made "necessary and proper" by the by-laws. The two 
former central banks, abolished by Congress refusing to 
renew their charters because of their political activity and 
becatise they had too much power, did not have a tenth of 
the power this bill would confer upon this corporation, and 
the length of their charters was but 20 years. 

In the whole measure there is not provided even one 
criminal penalty upon any officer, director or agent of the 
association, or any of its branches, or upon the corporation 
itself, for the violation of one or all of the provisions of 
the bill. 

Paragraph "second" almost confers immortality on this 
"soulless corporation," and "fourth" seems to grant it "hu-^ 
man rights" as well as corporate powers by making it equal 
to "natural persons." Individuals do not have corporate 
powers and ordinary c(»'porations do not have "natural 
human rights," but this bill seems to endow this money 
octopus with both corporate powers . and human rights. 



CORPORATE CURRENCY 25 

It was unnecessary expressly to say that it shall be equal 
to Omnipotence m authority, because that is practically as- 
sured by the other sections of the bill. 

Sec. 3. All national banks, and all banks or trust com- 
panies chartered by the lazvs of any State of the United 
States or of the District of Columbia, complying with the 
requirements for fnefnbership in the said National Reserve 
Association, hereinafter set forth, may subscribe to its 
capital to an amount equal to 20 per centum of the paid-in 
and unimpaired capital of the subscribing bank, and not 
more nor less; and each of such subscribing banks shall be- 
come a member of a local association as hereinafter pro- 
vided. Fifty per centum of the subscriptions to the capital 
stock of the National Reserve Association shall be fully 
paid in; the remainder of the subscriptions or any part 
thereof shall become a liability of the subscribers, subject to 
call and payment thereof whenever necessary to meet the 
obligations of the National Reserve Association under such 
terms and in accordance with such regulations as the board 
of directors of the National Reserve Association may 
prescribe. 

The subscriptions of a bank or trust company incor- 
porated under the laws of any State or of the District of 
Columbia to the capital stock of the National Reserve Asso- 
ciation shall be made subject to the following conditions: 

First. That (a) if a bank, it shall have a paid-in and 
unimpaired capital of not less than that required for a 
national bank in the same locality; and that (b) if a trust 
company, it shall have an unimpaired surplus of not less 
than 20 per centum of its capital, and if located in a place 
having a population of 6,000 inhabitants or less shall have a 
paid-in and unimpaired capital or not less than $50,000; if 
located in a city having a population of more than 6,000 
inhabitants and not more than 50,000 inhabitants, shall have 
a paid-in and unimpaired capital of not less than $100,000; 
if located in a city having a population of more than 50,000 
inhabitants and not more than 200,000 inhabitants shall have 
a paid-in and unimpaired capital of not less than $200,000; 
if located in a city having a population of more than 200,000 
inhabitants and not more than 300,000 inhabitants shall have 
a paid-in and unimpaired capital of not less than $300,000; 
if located in a city having a population of more than 300^000 
inhabitants and not more than 400,000 inhabitants shall have 
a paid-in and unimpaired capital of not less than $400,000, 



36 UNITED STATES MONEY vs. 

and if located in a city having a population of more thar^ 
400,000 inhabitants shall have a paid-in and unimpairec 
capital of not less than $500,000, 

Second. That it shall have and agree to maintain agains 
its demand deposits a reserve of like character and proper 
tion to that required by law of a national bank in the sami 
locality: Provided^ however, That deposits which it ma] 
have with any subscribing national bank, State bank or trus\ 
company in a city designated in the national banking laws a; 
a reserve city or antral reserve city shall count as reserve it 
like manner and to the same extent as similar deposit 
of a national bank with national banks in such cities. 

Third, That it shall have and agree to maintain againsi 
other classes of deposits the percentages of reserve required 
by this act. 

Fourth. That it shall agree to submit to such examina- 
tions and to make such reports as are required by law and 
to comply with the requirements and conditions imposed 
by this act and regulations made in conformity therewith. 

The words "subscribing banks" when used hereafter in 
this act shall be understood to refer to such national banks, 
and banks or trust, companies chartered by the laws of any 
State of the United States or of the District of Columbia, aj 
shall comply with the requirements for membership herein 
defined. 

Paragraph "second" of Section 3 indicates that bank re- 
serves are to be as now kept in other banks in reserve cities 
instead of in the "Central Reservoir" of the National Re- 
serve Association as had been represented. In fact, this bill 
seems to force all joining State banks and trust companies to 
send their reserves to Wall Street or to put the same in the 
national banks that now are constantly sending hundreds oi 
millions of dollars of the deposit savings of the people to 
Wall Street and thus are depriving the commuhities where 
such deposits are owned of their use. Paragraph "fourth" 
legally binds all joining State banks and trust companies 
to forever "comply with the requirements and conditions 
imposed by this act and regulations made in conformity 
therewith." 

The association is empowered to adopt by-laws containing 
such "regulations" as it may from time to time care to 
impose. The courts will compel all banks and trust coip- 
panies to obey the regulations or orders of the Central 
Association, for each in advance by adopted resolution and 



CORPORATE CURRENCY 37 

in writing legally binds itself to do so. Every act of each 
bank thus can be regulated or dictated by the association, 
such as interest rates, paid to depositors or charged on 
loans, investments, loans made, securities bought, expansion 
and contraction of the volume of its loans, etc. Under this 
power a mere circular order or "round robin*^ to the banks 
by the association can suddenly contract the volume of 
bank loans to business men to the extent of billions of dol- 
lars. The power of the association over every bank and 
trust company is about as great as it would be if it owned 
all of the stock of each bank and trust company. In- 
stead of the association hiing a subsidiary of the banks, the 
24,392 banks all are to be mere helpless subsidiaries of the 
National Reserve Association. Thus the tiew bom child is 
stronger than its parents. Through this clever means the 
big banks controlled by Wall Street that will dominate 
the association will be able to rule every individual bank and 
trust company in the United States. Country bankers there- 
after will be mere clerks for Wall Street. There never was 
such a big, powerful, nation-wide complete combine in all 
trust annals. It will be a trust of the trusts, and it is all 
to be done by act of Congress. And yet in his message in- 
dorsing this measure. President Taft said, "And I trust also 
that the new legislation will carefully and completely pro- 
tect and assure the individuality and independence of each 
bank to the end that any tendency there may ever be toward a 
consolidation of the money or banking power of the nation 
shall be defeated." If he meant what he says, he will have 
to veto this bill. If he did not mean it, why did he say it? 
Did he in a public message to Congress indorse a measure of 
great importance without knowing its provisions, and this 
only a few days before the bill was introduced into Con- 
gress? Or, did Aldrich conceal from the President the al- 
ready prepared bill while inducing him to publicly indorse 
the same? 

Sec. 4. The Secretary of the Treasury, the Secretary of 
Agriculture, the Secretary of Commerce and Labor, and 
the Comptroller of the Currency are hereby designated a 
committee to effect the organisation of the National Reserve 
Association, and the necessary expenses of said committee 
shall be payable out of the Treasury upon vouchers approved 
by the members of said committee, and the Treasury shall 
be reimbursed by the National Reserve Association to the 
full amount paid out therefor. 



28 UNITED STATES MONEY vs. 

Within sixty days after the passage of this act said com^ 
mittee shall provide for the opening of books for subscript 
tions to the capital stock of said National Reserve Asso^ 
ciation in such places as the said committee may designate. 
Before the subscription of any bank to the capital stock of 
the National Reserve Association shall be accepted, said 
bank shall file with the organization committee or after 
organization with the National Reserve Association a certi- 
fied copy of a resolution adopted by the board of directors of 
said hank accepting all the provisions and liabilities imposed 
by this act and authorizing the president or cashier of said 
bank to subscribe for said stock. 

This and other provisions tend to give the impression 
that the association is a public institution, being promoted 
by the Government, when it is only a mere private cor- 
poration. Morafly it binds the Government, which is to 
have responsibility without power. The Government should 
not go into partnership with, or loan its credit or influence 
to, any private individual or corporation. It is deceiving 
the people into believing that the association and its paper 
currency has behind it the credit of the Government, which 
it is claimed is not a fact. Under this bill the Government 
has no stock or financial interest in or the slightest effective 
control over the private corporation to which Congress is 
asked to grant power to issue and regulate the volume of 
the public currency. Making four appointed public officers 
ex-officio directors in a board of 46, and allowing the Presi- 
dent to appoint the Governor, but only from a list of three 
nominated by such board, gives not the slightest power of 
public control. It is intended to mislead the people. And 
if it is made to appear a Government action, the banks more 
generally may promptly respond by joining. There is no 
legitimate reason why members of the President's Cabinet 
should solicit subscriptions to the stock of this private cor- 
poration and have the expenses paid from the public 
treasury. It is, of course, a mere bluff. 

Sec. 5. When the subscriptions to the capital stock of 
the National Reserve Association shall amount to the sum 
of $200,000,000 the organization committee hereinbefore 
provided shall forthwith proceed to select 15 cities in the 
United States for the location of the branches of said Na- 
tional Reserve Association: Provided, That one branch shall 
be located in the New England States, including the States 
of Maine, New Hampshire, Vermont, Massachusetts, Rhode 



CORPORATE CURRENCY 29 

Island and Connecticut; two branches in the Eastern States, 
including the States of New York, New Jersey, Pennsyl- 
vania and Delaware; four branches in the Southern States, 
including the States of Maryland, Virginia, West Virginia, 
North Carolina, South Carolina, Georgia, Florida, Alabama, 
Mississippi, Louisiana, Texas, Arkansas, Kentucky, Tennes- 
see and also the^ District of Columbia; four branches in the 
Middle Western States, including the States of Ohio, In- 
diana, Illinois, Michigan, Wisconsin, Minnesota, Iowa and 
Missouri; four branches in the Western and Pacific States, 
including the States of North Dakota, South Dakota, 
Nebraska, Kansas, Montana, Wyoming, Colorado, New 
Mexico, Oklahoma, Washington, Oregon, California, Idaho, 
Utah, Nevada and Arizona, 

When the cities in which the branches are to be located 
have been selected the organisation committee shall forth- 
with divide the entire country into 15 districts, 7vith one 
branch of the National Reserve Association in each district: 
Provided, That the districts shall be apportioned with due 
regard to the convenient and customary course of business 
and not necessarily along State lines. 

The districts may be readjusted, and new districts and 
new branches may from time to time be created by the 
directors of the National Reserve Association whenever, in 
their opinion, the business of the country requires. 

It is made to appear that the Government is to control 
the dividing of the country up into districts. It is loudly 
claimed that Wall Street control is forever barred by this 
particular arrangement of districts. But the directors of 
the association expressly are given power to change the 
districts at will. In other words, they can immediately "re- 
adjust" so Wall Street will have complete control. And 
these district associations choose the directors of the Na- 
tional Reserve Association. 

Sec. 6. All subscribing banks within a district shall 
be grouped by the organisation committee or after organiza- 
tion, by the National Reserve Association, into local associa- 
tions of not less than 10 banks, with an aggregate capital 
and surplus of at least $5,000,000, for the purposes here- 
inafter prescribed: Provided, That the territory included 
in each association shall be contiguous and that in ap- 
portioning the territory due regard shall be had for the 
customary course of business and for the convenience of the 
banks forming the association: Provided further. That ir 



30 UNITED STATES MONEY vs. 

apportioning the territory to local associations comprising 
a district every bank and all of the territory within said 
district shall be located within the boundaries of some local 
association: And provided further. That every subscribing 
bank shall become a member only of the local association of 
the territory in which it is situated. 

The banks uniting to form a local association shall, by 
their presidents or vice presidents, under authority from the 
board of directors, execute a certificate in triplicate setting 
forth the name of the association, the names of the banks 
composing it, its principal place of business, its territorial 
limits, and the purposes for which it is organized. One 
copy of this certificate shall be filed with the Comptroller of 
the Currency, one copy shall be filed with the National Re- 
serve Association, and one copy shall be filed with the branch 
of the National Reserve Association of the district in which 
the local association is included. Upon the filing of such 
certificates the local association therein named shall become 
a body corporate and by the name so designated may sue and 
be sued and exercise the powers of a body corporate for the 
purposes mentioned in this act, and not othervuise. 

The local associations in each district may be readjusted 
from time to time and new associations may be authorized 
by the directors of the National Reserve Association. 

Local associations with their boasted republican form of 
government can be changed, "readjusted," at will by the im- 
perial board of directors of the central association. The 
whole management is despotism disguised as a democracy. 

Sec. 7. Each local association shall have a board of di- 
rectors, the number to be determined by the by-laws of the 
local association. Three-fifths of that number shall be 
elected by ballot cast by the representatives of the banks 
that are members of the local association, each bank having 
one representative and each representative one vote for each 
of the positions to be filled without reference to the number 
of shares which the bank holds in the National Reserve As- 
sociation. Two-fifths of the whole number of directors of 
the local association shall be elected by the same representa- 
tives of the several banks that are members of the associa^ 
tion, but in voting for these additional directors each repre- 
sentative shall be entitled to as many votes as the bank 
which he represents holds shares in the National Reserve 
Association: Provided, That in case 40 per centum of the 
capital stock in any subscribing bank is owned directly or 



CORPORATE CURRENCY 31 

indirectly by any other subscribing bank, or in case 40 per 
centum of the capital stock in each of two or more subscrib- 
ing banks, being members of the same local association, is 
owned directly or indirectly by the same person, persons, 
copartnership, voluntary association, trustee, or corporation, 
then and in either of such cases, neither of such banks shall 
be entitled to vote separately, as a unit, or upon its stock, 
except that such banks acting together, as one unit, shall 
be entitled to one votd, for the election of the board of di- 
rectors of such local association. In no case shall voting by 
proxy be allowed. The authorized representative of a bank, 
as herein provided, shall be its president, vice president, or 
cashier. 

Each director shall take an oath that he will, so far as 
the duty devolves upon him, diligently and honestly admin- 
ister the affairs of such association and will not knotvingly 
violate or willingly permit to be violated any of the pro- 
visions of this act. 

The directors originally elected shall hold office until the 
second Tuesday in February immediately following their 
election, and thereafter the directors shall be elected an- 
nually on that date and shall hold office for the term of one 
year, . 

The board of directors of the local association shall have 
authority to make by-laws, not inconsistent with law, which 
shall be subject to the approval of the National Reserve 
Association. 

If Congress exists to serve the people instead of the 
banks, it will consider immaterial the method of electing 
directors so long as the banks select all and the people none 
for the local associations. The whole scheme is for the 
benefit of the banks and not the people. All local by-laws 
must be approved by the supreme association. Sec. 7 seems 
to authorize ownership of one bank by another, branch bank- 
ing, now illegal; 40, 51 or 75 per cent of a bank's stock 
could be put in one or more cooperating holding companies 
and thus easily evade 'the restriction. 

Each director of a local, a branch, or of the national asso- 
ciation must take an oath that he will faithfully perform his 
duties. This is a joke, in view of the U. S.. Comptroller's 
charges that about 40,000 bank officers and directors almost 
every day knowingly violate their oaths which all take as 
bank officials. This oath is to serve the bank or the associa- 
tion, not the Government. No penalty or method of im- 



32 UNITED STATES MONEY vs. 

peachment is provided in the bank act or this bill against di- 
rectors who break their oaths. The provision is a mere 
bluff. There should be a penalty of fine and imprisonment 
against bank officers and directors who knowingly violate 
their sworn duty. This would at least modify the evils and 
somewhat improve administration. The central association 
can approve or veto the by-laws of local associations. It is 
the autocrat. 

Sec. 8. Each of the branches of the National Reserve 
Association shall have a hoard of directors, the number, not 
less than twelve in addition to the ex-oMcio member, to be 
axed by the by-laws of the branch. These directors shall be 
elected in the following manner: 

The board of directors of each local association shall elect 
by ballot a voting representative. One-half of the elected 
directors of the branch shall be elected by the vote of such 
representatives, each representative having one vote for 
each of the positions to be filled, without reference to the 
number of shares which the banks composing the associa^ 
tion tvhich he represents holds in the National Reserve As- 
sociation. One-third of the elected directors shall be elected 
by the same voting representatives, but each voting repre^ 
sentative in this case shall have a number of votes equal to 
the number of shares in the National Reserve Association 
held by all the banks composing the local association which 
he represents. The remaining one-sixth of the directors 
shall be chosen by the directors already elected and shall 
fairly represent the agricultural, commercial, industrial, and 
other interests of the district and shall not be officers nor 
while serving, directors of banks, trust companies, insurance 
companies, or other financial institutions. The manager of 
the branch shall be ex-oHicio a member of the board of 
directors of the branch and shall be chairman of the board. 

Each director shall take an oath that he will, so far as the 
duty devolves upon him, diligently and honestly administer 
the affairs of such association and will not knowingly violate 
or willingly permit to be violated any. of the provisions of 
this act. 

All the members of the board of directors of the branch 
except the ex-officio member shall at the first meeting of 
the board be divided into three classes. One-third of the 
directors shall hold office until the first Tuesday in March 
immediately following the election; one-third of the direc^ 
tors shall hold office for an additional period of one year 



CORPORATE CURRENCY 33 

after the first Tuesday in March immediately following the 
election; the remaining one-third of the directors shall hold 
office for an additional period of two years after the first 
Tuesday in March immediately following the election. All 
elections shall be held on the first Tuesday in March of each 
year, and after the first election all directors shall be elected 
for a term of three years: Provided, That the by-laws of the 
National Reserve Association shall provide for the manner 
of filling any vacancies which may occur in the board of 
directors of the branches. 

The board of directors of the branchy shall have author^ 
ity to make by-laws, not inconsistent with lazv, which shall 
be subject to the approval of the National Reserve Associa- 
tion, 

One-sixth of the directors of branch boards "shall fairly 
represent the agricultural, commercial, industrial," etc. This 
is advisory only, not mandatory, because there is no way 
provided to determine, and no penalty if it is not done. It 
is largely buncombe, for the banks will select only such 
men for "one-sixth" as the banking "five-sixths" consider 
friendly. The entire 24 directors of the great bank of 
England are all from these classes. No bankers can be on 
that board. This is because that bank issues the public 
currency and regulates the discount rate for the whole na- 
tion. It was feared that bankers, if directors, would manip- 
ulate the currency supply and discount rates for selfish 
objects, as surely they will do with this association. The 
central association may approve or veto the by-laws of 
branch associations. 

Sec. 9. The National Reserve Association shall have a 
hoard of directors, to be chosen in the following manner: 

First. Fifteen directors shall be elected, one by the board 
of directors of each branch of the National Reserve Asso- 
ciation. In case the number of districts shall be increased 
hereafter, each additional district shall be entitled to elect 
an additional director of this class. 

Second. Fifteen additional directors shall be elected, one 
by the board of directors of edch branch of the National 
Reserve Association, who shall fairly represent the agricul- 
tural, commercial, industrial, and other interests of the dis- 
trict, and who shall not be officers nor, while serving, direc- 
tors of banks, trust companies, insurance companies, or 
other financial institutions. In case the number of districts 



34 UNITED STATES MONEY vs. 

shall be increased hereafter, each additional district shall be 
entitled to elect an additional director of this class. 

Third. Nine additional directors shall be elected by vot- 
ing representatives chosen by the boards of directors of the 
various branches, each of whom shall cast a number of 
votes equal to the number of shares in the National Reserve 
Association held by the banks in the branch which he repre- 
sents. Not more than one of the directors of this class 
shall be chosen from one district. Directors of each of the 
three classes named above shall be residents of the district 
from which they are elected. 

Fourth. There shall be seven ex-oMcio members of the 
board of directors, namely: The governor of the National 
Reserve Association, who shall be chairman of the board, 
iwo deputy governors of the National Reserve Association, 
the Secretary of the Treasury, the Secretary of Agriculture, 
the Secretary of Commerce and Labor, and the Comptroller 
of the Currency. 

No member of any national or State legislative body 
shall be a director of the National Reserve Association, nor 
of any of its branches, nor of any local association. 

All the members of the board, except the ex-oMcio mem- 
bers, shall at the first meeting of the board be divided into 
three classes. One-third of the directors shall hold office 
until the first Tuesday in April immediately following the 
election; one-third of the directors shall hold office for an 
additional period of one year after the first Tuesday in 
April immediately following the election; the remaining one- 
third of the directors shall hold office for an additional 
period of two years after the first Tuesday in April im- 
mediately following the election. All elections shall be held 
on the first Tuesday in April of each year, and after the 
first election all directors shall be elected for a term of three 
years: Provided, That all directors provided for in sec- 
tions seven, eight, and nine of this Act shall serve until 
their successors have qualified: And provided further, That 
the by-laws of the National Reserve Association shall pro- 
vide for the manner of filling any vacancies zvhich may 
occur in the board of directors of the National Reserve 
Association. 

Each director shall take an oath that he zvill, so far as 
the duty devolves upon him, diligently and honestly admin- 
ister the affairs of such association and will not knowingly 



CORPORATE CURRENCY 35 

violate or willingly permit to be violated any of the pro- 
visions of this act. 

The hoard of directors of the National Reserve Associa- 
tion shall have authority to make by-laws, not inconsistent 
with law, which shall prescribe the manner in which the 
business of said association shall be co^iducted and the privi- 
leges granted to it by law exercised and enjoyed. 

The public is not interested in the complicated and 
confusing method of voting or choosing directors. It is an 
affair of the banks only. The people have no hand or voice 
in the selection of the governing board of this private asso- 
ciation or syndicate that is to control their entire money 
supply and fix the interest rates that the whole country must 
pay. Of the 46 directors, 42 are chosen by the banking 
fraternity. The other four are appointed public officials, 
ex-officio directors. Congressmen and legislators, officials 
for whom the people have voted are blacklisted. They can- 
not be upon local, branch or national boards; yet the 
people's elected Congressmen are expected to grant all these 
privileges and powers to the banks. But there is nothing 
to prevent Wall Street high financiers being directors. Di- 
rectors of the National Association serve until their suc- 
cessors are chosen, and they determine how vacancies shall 
be filled. Could not vacancies be "induced," to change con- 
trol, the board filling the vacancies? As they can revise and 
perhaps abolish the local and branch associations, there is 
nothing to prevent the first board constituting itself an auto- 
cratic self-perpetuating body in absolute control of a fifty 
year charter, a legally enforcible "vested right" giving 
imperial power over all banks, controlling the public cur- 
rency, and enjoying privileges obtained free that former 
Secretary of the Treasury Shaw is reported as saying are 
worth to the private interests in control more than the 
entire national debt, about one billion dollars. The power 
to make by-laws is a grant practically unlimited. The effect 
if not the design of the complicated system of electing 
directors is to confuse and divert public attention away from 
other provisions of the bill that really are important and 
dangerous. 

Sec. id. The executive officers of the National Reserve 
Association shall consist of a governor, two deputy gov- 
ernors, a secretary, and such subordinate officers as may 
be provided by the by-laws. The governor of the National 
Reserve Association shall be selected by the President of 



36 UNITED STATES MONEY vs. 

the United States from a list of not less than three sub- 
mitted to him by the board of directors of said association. 
The person so selected shall thereupon be appointed by the 
said board as governor of the National Reserve Association^ 
for a term of ten years, subject to removal for cause by 
a two-thirds vote of the board. There shall be two deputy 
governors, to be elected by the board, for a term of seven 
years, subject to removal for cause by a majority vote of 
the board. The two deputy governors first elected shall 
serve for terms of four years and seven years, respectively. 
In case of any vacancy in the oMce of deputy governor his 
successor shall be elected to fill the unexpired term. In the 
absence of the governor or his inability to act the deputy 
who is senior in point of service shall act as governor. The 
board of directors shall have authority to appoint such other 
officers as may be provided for by the by-laws. 

Three men will be selected by the bsmking interests. 
The President can say which of the three shall be "gov- 
ernor." No doubt the other two will be the "two deputy 
governors." This puts a serious responsibility upon the 
President and Government without power of free discre- 
tion. He should not mix in the matter unless he can select 
whom he thinks best suited in the public interest. If he ap- 
points the governor he should both deputies, and have 
power of removal. Otherwise the association should have 
the entire responsibility, the Government and all public offi- 
cials keeping out so not to even morally bind the Govern- 
ment to policies and acts that it is powerless to block, regu- 
late or execute. The Government should have full and 
supreme contrpl, or no part whatever in the management. 
There can be no safe compromise on this point. Even a 
bare majority would not be safe. It must be a genuine 
public institution or an absolute private corporation. A 
mixed deal will be dangerous, if not utterly unlawful. The 
plan of having the President appoint the "governor" from a 
list of three furnished him by the banking fraternity would 
be matched if the law was so changed that the President 
must appoint the Comptroller- who supervises and regulates 
the banks from a list of three persons given to him by the 
banks to be regulated. In France the Chief of State selects 
as eovernor of the Bank of France a man of his own choice, 
and it is conceded that no disadvantage to the bank or the 
country therefrom ever has been experienced. The pro- 
moters intend that the association shall be the "Govern- 



CORPORATE CURRENCY 37 

ment," exclusive, supreme and imperial, in the world of 
banking, business and finance. 

Sec. II. When the National Reserve Association is duly 
organized its board of directors shall call upon the sub- 
scribing banks for a payment of 50 per centum on the 
amount of their subscription to the capital stock of said as- 
sociation. When $100,000,000 of capital have been paid in 
the board of directors shall at once proceed to execute and 
file with the Secretary of State a certificate showing the 
payment of $100,000,000 on capital stock, and they shall 
further file with the Comptroller of the Currency a certifi- 
cate showing the title and location of each bank which has 
subscribed to the capital stock of ihe National Reserve 
Association, the number of shares subscribed by each, and 
the amount paid thereon, 

$100,000,000 probably is all the banks ever will pay in. 
The balance of the money needed will be manufactured on 
the association's printing press, circulating notes of the as- 
sociation, corporate currency, which it is to be authorized 
to issue without limit. This $100,000,000 no doubt will be 
paid in U. S. bonds (Under Sec. 49), the association get- 
ting with the bonds the $100,000,000 bank-note currency 
based thereon. The association can hand this currency bank 
to the banks for their free use permanently, except ij^ per 
cent tax. And lo, and behold I The banks have bought and 
own $200,000,000 reserve association stock on which they 
have paid $100,000,000, the association has obtained $100,- 
000,000 of assets in shape of U. S. bonds, has deposited 
the bonds with the U. S. Treasury and obtained $100,000,000 
of bank-note currency which it has permanently loaned to 
the banks for the mere government tax, and the whole 
thing is completed without the banks supplying a single 
dollar of their money ! Then the banks through their asso- 
ciation will get the 2 per cent interest on the deposited 
$100,000,000 U. S. bonds, will receive 4 per cent or 5 per 
cent on the $100,000,000 of association stock and say 6 per 
cent for use of $100,000,000 bank-note currency when loaned 
to customers, less ij4 per cent tax. This confederated 
banking fraternity invests $100,000,000, but gets interest on 
$300,000,000. That's financiering I The "joker" is the fact 
that the Government issues the $100,000,000 of currency, 
hands it over to the banks, allows the banks to have the in- 
terest on the bonds and what they can get loaning out the 
money and then charges banks only a nominal tax. Under 



38 UNITED STATES MONEY vs. 

the present system banks get two profits, but under the 
Aldrich plan they get three. In fact, under Sec. 23 the 
Government must deposit all its public moneys with this 
corporation immediately and then keep on doing so, without 
interest. This fixes it so that as soon as the association 
is formed the Government must hand over about $150,000,- 
000 of cash belonging to the people, 50 per cent more than 
the $100,000,000 paid in by the banks, same to be loaned 
out at 6 per cent to the people through the banks for the 
profit of the banks' association. And based on this $150,- 
000,000 of public money, if it is put into bank cash reserves, 
the banks actually can loan an additional $1,500,000,000 
"credit" to the people at 6 per cent. Or, better yet, the 
association can hold this $150,000,000 of Government 
money, using it as its own cash reserve instead of gold, 
issue based on this reserve $450,000,000 of its own corpo- 
rate currency, and hand this $450,000,000 of corporate paper 
currency over to its banks to be held by them as their "legal 
cash reserve" on which the banks then lawfully can loan 
$4,500,000,000 of additional credit loans to the people at 6 
per cent. This huge increase of bank loans is based wholly 
upon the original $150,000,000 of Government money be- 
longing to the people of the United States, and the banks 
are enabled to increase the quantity of their bank loans over 
four billion dollars and to collect 6 per cent thereon from 
the people each year just because the people's Congress 
authorizes by law this astonishing power. And for all of 
this enormous increase of the profits of banks through use 
of public revenues the Aldrich bill does not propose to in- 
sure one cent of compensation to the Government or the 
people. 

There is no objection to the Government using the banks 
as a means of putting currency into circulation among the 
people, but the Government should receive the full value to 
the banks of the currency it so supplies. If this had been 
done continuously in the past it would have yielded to the 
Government without unfair burden on the banks enough to 
have paid off the entire national debt, now nearly $1,000,- 
000,000. 

Much loud talk by Aldrich has conveyed the impression 
that banks would make only 4 per cent We now see they 
will get at least double that profit direct, and vastly more 
indirectly. 

Sec. 12. Shares of the capital stock of the National Re- 



CORPORATE CURRENCY 39 

serve Association shall not he transferable, and under no 
circumstances shall they be hypothecated nor shall they be 
owned otherwise than by subscribing banks, nor shall they 
he owned by any such bank other than in the proportion 
herein provided. In case a subscribing bank increases its 
capital it shall thereupon subscribe for an additional amount 
of the capital of the National Reserve Association equal to 
20 per centum of the bank's increase of capital, paying there- 
for its then book value as shown by the last published state- 
ment of said association. A bank applying for membership 
in the National Reserve Association at any time after its for- 
mation must subscribe for an amount of the capital of said 
association equal to 20 per centum of the capital of said 
subscribing bank, paying therefor its then book value as 
shown by the last published statement of said association. 
When the capital of the National Reserve Association has 
been increased either on account of the increase of capital 
of the banks in said association or on account of the in- 
crease in the membership of said association, the board of 
directors shall mqke and execute a certificate shoiving said 
increase in capital, the amount paid in and by whom paid. 
This certiUcate shall be filed in the office of the Comptroller 
of the Currency. In case a subscribing bank reduces its 
capital it shall surrender a proportionate amount of its hold- 
ings in the capital of said association, and if a bank goes 
into voluntary liquidation it shall surrender all of its hold- 
ings of the capital of said association. In either case the 
shares surrendered shall be canceled and the' bank shall 
receive in payment therefor a sum equal to their then book 
value as shown by the last published statement of said asso- 
ciation. 

If any member of the National Reserve Association shall 
become insolvent and a receiver be appointed, the stock held 
by it in said association shall be canceled and the balance, 
after paying all debts due by such insolvent bank to said 
association (such debts being hereby declared to be a first 
lien upon the paid-in capital stock), shall be paid to the 
receiver of the insolvent bank. 

Whenever the capital stock of the National Reserve As- 
sociation is reduced, either on account of the reduction in 
capital of members of said association or the liquidation or 
insolvency of any member, the board of directors shall make 
and execute a certificate showing such reduction of capital 
stock and the amount repaid to each bank. This certificate 



40 UNITED STATES MONEY vs. 

shall be filed in the oMce of the Comptroller of the Currency. 

The association and the banks, instead of the Govern- 
ment, get the excess profits going to surplus in addition to 
the 4 or 5 per cent cumulative dividends, by figuring the 
basis as "book value" instead of par. Membership, which 
is a privilege and not an enforcible legal right, is forfeited 
just as soon as a bank gets into trouble and a receiver is 
appointed. The association has a first lien (ahead of de- 
positors) on the funds of a bank invested in association 
stock, for any debt of the bank to the association. It is by 
law to be made a preferred creditor. 

Sec. 13. The National Reserve Association and its 
branches and the local associations shall be exempt from 
local and State taxation except in respect to taxes upon 
real estate. 

This creature corporation of the banks may become a 
ready means, under this section, for dodging local taxes on 
hundreds of millions and perhaps billions of dollars of 
otherwise taxable assets. Many big banks and bankers are 
said to now evade taxes by tricks of bookkeeping, thus in- 
creasing the taxes of other people. 

Sec. 14. The directors of the National Reserve Associa^ 
tion shall annually elect from their number an executive 
committee and such other committees as the by-lcnvs of 
the National Reserve Association may provide. The exec- 
utive committee shall consist of nine members, of zvhick 
the governor of the National Reserve Association shall be 
ex'oMcio chairman and the two deputy governors and the 
Comptroller of the Currency ex-ofRcio members, but not 
more than one of the elected members shall be chosen from 
any one district. 

The executive committee shall have all the authority 
which is vested in the board of directors, except the power 
of nomination, appointment, and removal of the governor 
and deputy governors and except such as may be specific 
cally delegated by the board to other committees or to the 
executive officers, or such as may be specifically reserved 
or retained by the board. 

The States reserved all power not expressly delegated to 
the Federal Government. Congress by law is to grant all 
power to this executive committee of 9 that is not specifi- 
cally reserved by action of the board of 46 directors of the 
Reserve Association. The executive committee of 9 is 
given all the power over the business and operations pos- 



CORPORATE CURRENCY 41 

sessed by the 46 directors, and 5 is a working majority. 
Twenty-four of the 46 directors can select this committee 
and 5 members of the committee, the governor, two deputy 
governors and two others; just five persons will absolutely 
rule the National Reserve Association and wield its limit- 
less and dangerous powers. This will be the secret "holy 
of holies," ami these five men will be selected by and ever 
do the will of Wall Street. These five men will decide from 
day to day the amount of money 94,000,000 people shall 
have for their use and the interest rate they must pay. They 
will have power to rediscount or aid any and every bank, 
and to refuse to do so. They will each day determine the 
quantity of bank credit the business of the country can 
borrow, who shall have it, and what must be paid therefor. 
These five men without prior public notice will be able sud- 
denly to contract and cancel say $500,000,000 of corporate 
currency and thus force the federated banks to contract 
their loans of credit and make their customers pay up imme- 
diately $5,000,000,000 of their debts to the banks. This 
is the power to wreck prices, slaughter securities and prop- 
erty, shut down industries, forcing labor into idleness, caus- 
ing general bankruptcy, panic, ruin. These five will be the 
executioners, the "headsmen," of all American business. 

Congress is asked to grant power to do all these things 
to five irresponsible men, who are certain to be the dum- 
mies of the high financiers, and who with all power and no 
public responsibility, in secret will sit in unchallenged final 
judgment 7inth life and death power over the welfare and 
very existence of every bank and through the banks over 
the business of every individual and corporation in the 
United States. And as is usual in such cases, one man, prob- 
ably the governor, perhaps dominated from the outside 
by special interests, will rule the five and be sole master of 
the association and all its vast powers. 

Do business men want Congress to grant for 50 years to 
•five persons whom they do not know and never will see, 
absolute power to crush their business by subtle means any 
time without a moment's notice? 

Sec. 15. There shall be a board of examination elected 
annually by the board of directors from among their num- 
ber, excluding the members of the executive committee, 
of which the Secretary of the Treasury shall be ex-oMcio 
chairman. It shall be the duty of this board to carefully 
examine the condition and the business of the National Re 



CORPORATE CURRENCY 43 

serve Association and of its branches and to make a public 
statement of the result of such examination at least once a 
year. 

The association thus is empowered to regulate itself. 
.S^o public regulation or control is provided. The corpo- 
ration is to be independent of government, supreme. 

Sec. 16. Each branch shall have a manager and a deputy 
manager appointed from the district by the governor of the 
National Reserve Association zvith the approval of the 
executive committee of said association and the board of 
directors of the branch, and subject to removal at any time 
by the governor with the approval of the executive com- 
mittee of the National Reserve Association. The powers 
and duties of the manager and deputy manager and of the 
various committees of the branches shall be prescribed by 
the by-laws of the National Reserve Association. 

Sec. 17. The directors of each local association shall 
annually elect from their number a president, a vice-presi- 
dent, and an executive committee, whose powers and duties 
shall be determined by the by-laws of the local association, 
subject, however, to the approval of the National Reserve 
Association. 

Sec. 18. The National Reserve Association shall cause 
to be kept at all times, at the head office of the associch 
Hon, a full and correct list of the names of the banks own- 
ing stock in the association and the number of shares held by 
each. Such list shall be subject to the inspection of all the 
shareholders of the association, and a copy thereof on the 
irst Monday of July of each year shall be transmitted to the 
Comptroller of the Currency. 

The association rules absolutely its branches and the 
local associations. The Government and the people have 
no effective voice in this private corporation that is to get 
the free use of all public moneys and for 50 years issue and 
control for its own profit all public currency. 

Sec 19. The earnings of the National Reserve Associa- 
tion shall be disposed of in the following manner: 

After the payment of all expenses and the franchise and 
other taxes not provided for in this section the shareholders 
shall be entitled to receive an annual dividend of 4 per 
centum on the paid-in capital, which dividend shall be cumu- 
lative. Further annual net earnings shall be disposed of as 
follows: First, a contingent fund shall be created, which 
shall be maintained at an amount equal to i per centum 



44 UNITED STATES MONEY vs. 

on the paid-in capital, and shall not exceed in any event 
$2,000,000 and shall be used to meet any possible losses. 
Such fund shall, upon the final dissolution of the National 
Reserve Association, be paid to the United States and shall 
not under any circumstances be included in the book value 
of the stock or be paid to the shareholders. Second, one^ 
half of additional net earnings shall be paid into the surplus 
fund of the National Reserve Association until said fund 
shall amount to 20 per centum of the paid-in capital, one- 
fourth shall be paid to the United States as a franchise tax, 
and one-fourth shall be paid to the shareholders, until the 
shareholders^ dividend shall amount to 5 per centum per 
annum on the paid-in capital: Provided, That no such divi- 
dends, exclusive of the cumulative dividends above provided 
for, shall at any time be paid in excess of 5 per centum 
in any one year. Whenever and so long as the contingent 
fund has been provided for and the 5 per centum dividend 
has been paid to shareholders one-half of the additional 
earnings shall be added to the surplus fund, and one-half 
shall be paid to the United States as a franchise tax. When- 
ever and so long as the surplus fund of the National Re- 
serve Association amounts to 20 per centum of the paid-in 
capital and the shareholders shall have received dividends 
not exceeding 5 per centum, all excess earnings shall be 
paid to the United States as a franchise tax. 

Right here the game of Euchre begins, the Government 
getting plenty of experience, but the banks taking all the 
tricks. This reads like the Government might get a lot of 
money as its share of the partnership profits. But under 
the above provision probably it will never get one cent. The 
$2,000,000 "contingent fund" it can not get until the end 
of the charter, 50 years. If the association never earns net 
over 4 per cent and sufficient to keep its $2,000,000 "con- 
tingent fund" to pay losses intact, clearly nothing would go 
to the Government. It no doubt will keep its profits down 
to that basis by cutting its discount rates charged b^nks for 
rediscounting (under Sections 26, 27, 28, 29), because then 
banks will get all the excess profits, in form of lower dis- 
count charges. Whereas, if the discount rate was kept up 
the association would have excess profits that the banks 
must divide with the Government, although on a grossly 
unfair basis. As the banks own all of the association's stock 
and pay to the association all the revenue it receives, what 
is the use of letting the Government get away with any of 



CORPORATE CURRENCY 45 

the profits when the banks can keep all by simply manipulat- 
ing the interest or discount charges? And Carnegie says 
we cannot trust the "human nature" of big financiers when 
their interests are at stake. We must expect them to grab 
every dollar they can get and keep out of jail — ^and then 
some. But if this bill passes, this method by which the 
banks will euchre the Government out of all of the joint 
profits will be made lawful. If the association keeps its 
reserve intact (Sec. 41) and issues no more than $900,000,- 
000 of its corporate currency (Sec. 51)^ there is no other 
provision under which the Government can receive a dollar 
of profit or benefit. Section 56 gives it i J4 per cent annual 
tax on the bank-note currency or bonds taken over by the 
association from the banks, but i per cent of this is given 
back by exchanging 3 per cent 50-year Government bonds 
for the present 2 per cent bonds. This leaves only J^ per 
cent, the same amount the Government now is receiving as a 
tax on bank-note currency, which only about covers the ex- 
pense. The history of the banking system g^ven in another 
chapter proves that the banks always take advantage of 
the Government when they have the power so to do. 

The greatest high finance minds in the world have spent 
months, years, helping to devise the provisions of this bill. 
It is a great success — for the banks. Its ingenious, sly and 
crafty wording and provisions makes the measure a genuine 
wonder. Every little sentence has a meaning of its own. 
Every addition to "surplus" increases the "brok value" of 
the association stock, the benefit all going to the banks be- 
sides their liberal dividends. 

Sec. 20. Any member of a local association may apply 
to such association for a guaranty of the commercial paper 
which it desires to rediscount at the branch of the National 
Reserve Association in its district. Any such bank receive 
in^ a guaranty from a local association shall pay a com^ 
mission to the local association, to be fixed in each case by 
its board of directors. Expenses and losses in excess of 
commissions shall be met by an assessment of the members 
of the local association in proportion to the ratio which their 
capital and surplus bears to the aggregate capital and sur- 
plus of the members of the local association, which assess- 
ment shall be made by its board of directors, and the com- 
mission received for such guaranty, after the payment of 
expenses and possible losses, shall oe distributed among the 
several banks of the local association in the same proportion. 



46 UNITED STATES MONEY vs. 

A local association shall have authority to require security 
from any bank offering paper for guaranty, or it may de- 
cline to grant the application. The total amount of guaran- 
ties by a local association to the National Reserve Associor 
tion shall not at any time exceed the aggregate capital and 
surplus of the banks forming the guaranteeing association. 

A local association may legally refuse to aid a par- 
ticular bank. This puts any bank or trust company at the 
mercy of any local dominant clique among banks. The 
bank has paid its quota, is obligated, yet aid in time of need 
can be refused and this notwithstanding Section 22, which 
extends to each bank the privileges of the national associa- 
tion; for the local has power, under Section 20, to block 
such help. Discrimination and favoritism as between banks 
would be legal and probable. One bank can be charged a 
mere nominal commission and another a prohibitory figure. 
A bank is made legally liable without limit for losses by a 
local association under its guarantee on paper certified for 
rediscount, and this without the consent or knowledge of 
such bank. It is made liable without limit for acts of others 
whom it cannot control or restrain. 

Sec. 21. Any local association may by a vote of three- 
fourths of its members and with the approval of the Na- 
tional Reserve Association, assume and exercise such of the 
powers and functions of a clearing house as are not incon- 
sistent with the purposes of this act. The National Reserve 
Association may require any local association to perform 
such services in facilitating the domestic exchanges of the 
National Reserve Association as the public interests may 
require. 

For many years banks have sought means to legalize 
and incorporate clearing houses, and now here it is in 
smoothest and broadest form. Sections 6 and 21 do the trick. 
Every local association is made a distinct corporation. 
Every bank clearing house is a local trust for regulating 
competition between banks so as to keep low the rate of in- 
terest paid to depositors and high the rates charged bor- 
rowers. This destruction of competition between banks and 
the fact that no new competing banks will be permitted to be 
established in any city or town to compete with the banks 
joining this association, are among the chief arguments 
being made directly to banks by the promoters of this 
scheme to induce the co-operation of all banks. But what 
are the business men and the people who must depend upon 



CORPORATE CURRENCY 47 

bank loans and pay the interest rates going to say about 
this plan of establishing in every town a monopoly of money 
and bank credit and destruction of competition? 

Sec. 22. All of the privileges and advantages of the 
National Reserve Association shall be equitably extended 
to every bank of any of the classes herein defined which 
shall subscribe to its proportion of the capital stock of the 
National Reserve Association and shall otherwise conform 
to the requirements of this act: Provided, That the National 
Reserve Association may suspend a bank from the privileges 
of membership for refusal to comply with such requirements 
or for failure for thirty days to maintain its reserves, or to 
make the reports required by this act, or for misrepresentch 
tion in any report or examination as to its condition or as to 
the character or extent of its assets or liabilities. 

The National Association can suspend any bank refus- 
ing to comply with the requirements imposed on it, deprive 
it of all aid and benefit. The "child" can discipline its par- 
ents. If a bank does not "conform to the requirements of 
this act," for example, does not instantly obey an order to 
contract its loans to its regular customers, say half, it can 
be "suspended," denied aid, even in a panic. 

Sec. 23. The National Reserve Association shall be the 
principal fiscal agent of the United States. The Govern^ 
ment of the United States shall upon the organisation of 
the National Reserve Association deposit its general funds 
with said association and its branches, and thereafter all re- 
ceipts of the Government, exclusive of trust funds, shall 
be deposited with said association and its branches, and all 
disbursements by the Government shall be made through 
said association and its branches. 

Sec. 24. The Government of the United States and 
banks owning stock in the National Reserve Association 
shall be the only depositors in said association. All domes- 
tic transactions of the National Reserve Association shall be 
confined to the Government and the subscribing banks, with 
the exception of the purchase or sale of Government or 
State securities or securities of foreign governments or of 
gold coin or bullion. 

Sec. 25. The National Reserve Association shall pay no 
interest on deposits. 

The total general-fund receipts of the government for 
the fiscal year to June 30, 191 1, were $759,707,100.03. The 
association thus will receive Government deposits amount- 



4S UNITED STATES MONEY vs. 

ing during each year in the aggregate to more than three- 
fourths of a billion dollars, or $40,000,000,000 during the 
next 50 years, for nothing. June 30, 191 1, the balance on 
hand was $140,176,926.13. December, 1907, it was ovfer 
$240,000,000. 

These vast sums of public money raised by the taxation 
of the people are all to be turned over free to this private 
corporation for deposit and by it to be loaned to the people 
through its banks for the exclusive profit of the corporation. 
And Sec. 25 (aimed at the Government exclusively) pre- 
vents Government getting one cent for the use of these 
vast sums. Yet the members of the Monetary Commission 
who prepared this bill, were paid and sworn "servants" of 
the people. Section 23 requires that every dollar paid out 
by the Government must be paid through this corporation, 
thus virtually making it the guardian of the Republic. 

The Central Bank is prohibited from doing any "domestic" 
business except with banks, but it can do business abroad 
without restriction or limit. It can legally take the Govern- 
ment's deposited revenues raised by taxation that it gets the 
use of free, and loan the same to carry on business in 
Europe or Asia, but not in the United States. 

Sec. 26. The National Reserve Association may through 
a branch rediscount for and with the indorsement of any 
bank having a deposit with it, notes and bills of exchange 
arising out of commercial transactions; that is, notes and 
bills of exchange issued or drawn for agricultural, indus^ 
trial, or commercial purposes, and not including notes or 
bills issued or drawn for the purpose of carrying stocks, 
bonds, or other investment securities. 

Such notes and bills must have a maturity of not more 
than twenty-eight days, and must have been made at least 
thirty days prior to the date of rediscount. The amount so 
rediscounted shall at no time exceed the capital of the bank 
for which the rediscounts are made. The aggregate of such 
notes and bills bearing the signature or indorsement of any 
one person, company, Urm, or corporation, rediscounted for 
any one bank, shall at no time exceed ten per centum of the 
unimpaired capital and surplus of said bank. 

Sec. 27. The National Reserve Association may through 
a branch also rediscount, for and with the indorsement of 
any bank having a deposit with it, notes and bills of ex- 
change arising out of commercial transactions as herein-- 
before defined, having more than twenty-eight days, but 



CORPORATE CURRENCY 49 

not exceeding four months, to run, but in such cases the 
paper must be guaranteed by the local association of which 
the bank asking for the rediscount is a member. 

Sec. 28. Whenever, in the opinion of the governor of 
the National Reserve Association, the public interests so 
require, such opinion to be concurred in by the executive 
committee of the National Reserve Association and to have 
the definite approval of the Secretary of the Treasury, the 
national Reserve Association may through a branch dis- 
count the direct obligation of a depositing bank, indorsed by 
its local association, provided that the indorsement of the 
local association shall be fully secured by the pledge and 
deposit with it of satisfactory securities, which shall be held 
by the local association for account of the National Reserve 
Association; but in no such case shall the amount loaned by 
the National Reserve Association exceed three-fourths of 
the actual value of the securities so ^pledged. 

Sec. 29. The power of rediscount and discount granted 
to the National Reserve Association by sections twenty-six, 
twenty-seven and twenty-eight of this act shall in each case 
be exercised through the branch in the district in which the 
bank making the application is located. 

Can any one read these provisions and deny that the 
association is a Central Bank? If so, what is a Central 
Bank? The "lid is off." The association can discount and 
rediscount for the banks practically without limit. The 
foundation is laid for the wildest wild-cat banking inflation 
ever dreamed of. It is an "endless chain." It is "wide 
open." When the bubble bursts no doubt it will exceed any 
financial catastrophe in all history* Any and all kinds of 
^'securities" and "paper" in one way or another can be 
juggled and used as "security," and basis for inflating and 
issuing hundreds of millions of corporate currency claimed 
not to be guaranteed by the Government. 

In a great stock market campaign, when call loan rates 
are bid up high, banks can rediscount at the Central Bank 
their ordinary 6 per cent commercial paper, and get print- 
ing press corporate currency in unlimited amounts to loan 
at 10, 30, 50 or 100 per cent to the stock gamblers for use 
in fleecing the public in the speculative struggle. The whole 
scheme is rigged for the convenience of Wall Street. 

Sec. 30. The National Reserve Association shall have 
authority to Hx its rates of discount from time to time, 



IHTO 



CORPORATE CURRENCY 51 

ti/hich when so fixed shall be published, and shall be uniform 
throughout the United States, 

Power to raise and lower the general discount rate is 
the power to increase and decrease interest rates and the 
prices of all securities, property and labor. It is the power 
to veto prosperity, curtail credit and the volume of business, 
and if carried to extreme to cause panic. Inflation anJ 
contraction of the currency and bank credit is an equally 
dangerous power. And this power is to be exercised each 
day in secret by five irresponsible men for the whole United 
States. 

Sec. 31. National banks are hereby authorised to accept 
drafts or bills of exchange drawn upon them, having not 
more than four months to run, properly secured, and arising 
out of commercial transactions as hereinbefore defined. The 
amount of such acceptances outstanding shall not exceed 
one-half the capital and surplus of the accepting bank, and 
shall be suhject to the restrictions of section fifty-two hun- 
dred of the Revised Statutes, 

Sec. 32. The National Reserve Association may, Ziehen- 
ever its own condition and the general financial conditions 
warrant such investment, purchase from a subscribing bank 
acceptances of banks or acceptors of unquestioned financial 
responsibility arising out of commercial transactions as 
hereinbefore defined. Such acceptances must have not 
exceeding ninety days to run, and must be of a character 
generally known in the market as prime bills. Such accept- 
ances shall bear the indorsement of the subscribing bank 
selling the same, which indorsement must be other than that 
of the acceptor. 

Sec. 33. The National Reserve Association may invest 
in United States bands; also in obligations, having not more 
than one year to run, of the United States or its depen- 
dencies, or of any State, or of foreign governments. 

Sec. 34. The National Reserve Association shall have 
power, both at home and abroad, to deal in gold coin or 
bullion, to make loans thereon, and to contract for loans of 
gold coin or bullion, giving therefor, when necessary, accept- 
able security, including the hypothecation of any of its hold- 
ings of United States bonds. 

Sec. 35. The National Reserve Association shall have 
power to purchase from its subscribing banks and to sell, 
with or without its indorsement, checks or bills of exchange, 
arising out of commercial transactions as hereinbefore de- 



52 UNITED STATES MONEY vs. 

fined, payable in such foreign countries as the board of 
directors of the National Reserve Association may deter- 
mine. These bills of exchange must have not exceeding 
ninety days to run, and must bear the signatures of two or 
more responsible parties, of which the last one shall be that 
of a subscribing bank. 

Sec. 36. The National Reserve Association shall have 
power to open and maintain banking accounts in foreign 
countries and to establish agencies in foreign countries for 
the purpose of purchdsing, selling, and collecting foreign 
bills of exchange, and it shall have authority to buy and 
sell, with or without its indorsement, through such corre- 
spondents or agencies, checks or prime foreign bills of 
exchange arising out of commercial transactions, which have 
not exceeding ninety days to run, and which bear the signa^ 
tures of two or more responsible parties. 

The association thus is legally authorized to sit in and 
play the international game of financial pokjer with all of the 
world's gold in the jack-pot. Section 36 equips it to take 
its position as the American branch of the coming gpreat 
international money combine that will soon eliminate or 
suppress all serious competition for important loans and 
double the burden on the human race by increasing univer- 
sally the rates of interest for money and credit. 

Sec. 37. It shall be the duty of the National Reserve 
Association or any of its branches, upon request, to transfer 
any part of the deposit balance of any bank having an 
account with it to the credit of any other bank having an 
account with the National Reserve Association. If a deposit 
balance is transferred from the books of one branch to the 
books of another branch, it may be done, under regulations 
to be prescribed by the National Reserve Association, by 
mail, telegraph, or otherwise, at rates to be fixed at the time 
by the manager of the branch at which the transaction 
originates. 

Sec. 38. The National Reserve Association may pur- 
chase, acquire, hold, and convey real estate for the following 
purposes and for no other: 

First. Such as shall be necessary for the immediate 
accommodation in the transaction of the business eithet of 
the head oMce or of the branches. 

Second. Such as shall be mortgaged to it in good faith 
by way of security for debts previously contracted. 

Third. Such as shall be conveyed to it in satisfaction of 



CORPORATE CURRENCY 53 

debts previously contracted in the course of its dealings. 

Fourth. Such as it shall purchase at sales under judg- 
ments, decrees, or mortgages held by said association, or 
shall purchase to secure debts due to it. 

But the National Reserve Association shall not hold the 
possession of any real estate under mortgage or the title 
and possession of any real estate purchased to secure any 
debts due to it for a longer period than five years. 

There will be a big saving for the banks in reduction of 
the cost of transferring funds. This cost can be paid by 
the association, if necessary to reduce profits so as to avoid 
paying anything to the Government 

Sec. 39. All subscribing banks must conform to the 
following requirements as to reserves to be held against 
deposits of various classes, but the deposit balance of any 
subscribing bank in the National Reserve Association and 
any notes of the National Reserve Association which if 
holds may be counted as the whole or any part of its required 
reserve: 

First. On demand deposits: National banks in different 
localities shall maintain the same percentages of reserve 
against demand deposits as is now required by law, and the 
same percentages of reserve against demand deposits shall 
be required of all other subscribing banks in the same 
localities. 

Second. On time deposits: All time deposits and moneys 
held in trust payable or maturing within thirty days shall 
be subject to the same reserve requirements as demand 
deposits in the same locality. All time deposits and moneys 
held in trust payable or maturing more than thirty days from 
date shall be subject to the same reserve requirements as 
demand deposits for the thirty days preceding their maturity, 
but no reserves shall be required therefor except for this 
period. Such time deposits and moneys held in trust, pay- 
able only at a stated time not less than thirty days from date 
of deposit, must be represented by certificates or instruments 
in writing and must not be allowed to be withdrawn before 
the time specified without thirty days? notice. 

Note that the present reserve law is not repealed. The 
changes herein made do not require the banks to take any 
of their reserves out of Wall Street or to put same in the 
association's "central reservoir.'* 

Bank-note currency is not "lawful money." It never 
could be counted as part of bank cash reserves. It would 



54 UNITED STATES MONEY vs. 

be too much like a man writing and signing his own prom- 
issory note for a million and then claiming that this made 
him a millionaire. But what the law prohibits banks doing 
singly they now propose to do collectively through their 
association by counting its corporate currency as part of 
bank reserves. It is a dangerous, reckless plan. The bill, 
like all legislation in recent years, reduces the duties and 
increases the privileges of the banks. 

Sec. 39 authorizes mere commercial paper dumped onto 
the Association by a bank and re-discounted to obtain a 
"deposit balance" at the National Reserve Association to be 
counted as "legal cash reserve," on which such bank then 
lawfully can inflate its credit loans ten times the increase of 
its "reserve" so obtained. This opens the way for an "end- 
less chain" inflation. No reserves at all are to be held 
against "time deposits" by the banks. This may reduce by 
half the $1,500,000,000 cash the banks now must hold as a 
reserve to protect depositors. Stating it diifferently, if half 
of present bank liabilities are converted from "demand 
deposits" into such "time deposits," the banks will be able 
to inflate and double their loans of "credit," getting say 
6 per cent interest on at least $15,000,060,000 of extra 
"loans," without furnishing one more dollar, of capital, or 
money. It will further raise prices and start an era of wild 
and dangerous speculation. On the average it would re- 
duce by half the cash reserves the law now requires banks 
to hold. This would enable banks to loan about $26,000 
instead of $io>ooo of "credit" for each $1,000 of cash they 
possess. It would epable the 24,392 banks ultimately to 
pracjtically double their annual net profits without one dollar 
of extra investment or expanse. This is part of the bribe 
offered by Wall Street to the banks through the Aldrich 
measure to induce them to join the conspiracy ind help 
force the bill through Congress. 

Sec. 40... National bq.nks may loan not more than thirty 
per centum of their time deposits, qs herein defined, upon 
improved and unencumbered real estate, such loans not to 
exceed fifty per centum of the actual value of the property, 
which property sfiall be situated in the vicinity or in the 
territory directly tributary to the bank: Provided, That 
this privilege shall not oe extended to banks acting as 
reserve agents for banks or trust companies. 

National banks are by law prohibited from loaning on 
real estate. They were created to serve trade and com- 



CORPORATE CURRENCY 55 

merce, banks of discount instead of mere loan agencies. 
Their assets were to be kept in quick, liquid form, not tied 
up in stationary loans. This bill authorizes national banks 
to loan on real estate up to "thirty per centum of their time 
deposits" and permits a bank, if it desires, to convert all its 
liabilities into "time deposits." This gives national banks 
a club to force all state banks and trust companies into this 
bank combine, or to take away from state institutions a 
large portion of their business and profits. It also- tends to 
take the business of making real estate loans away from 
attorneys and other individuals and give banking corpora- 
tions a complete monopoly of making loans of every char- 
acter. Every lawyer and all business men not owned or 
ruled by the big national banks will fight this bill, if they 
wish to protect their own interests and welfare. The great 
menace to the legal profession is the increasing monopoly 
by a few corporations of business formerly conducted by 
lawyers exclusively. This bill makes it worse. 

Sec. 41. All demand liabilities, including deposits and 
circulating notes, of the National Reserve Association shall 
be covered to the extent of fifty per centum by a reserve of 
gold (including foreign gold coin and gold bullion) or other 
money of the United States which the national banks are 
now authorised to hold as a part of their legal reserve: 
Provided, That whenever and so long as such reserve shall 
fall and remain below fjo per centum the National Reserve 
Association shall pay a special tax upon the deficiency of 
reserve at a rate increasing in proportion to such deficiency 
as follows: For each 2^2 per centum or fraction thereof 
that the reserve falls below 50 per centum a tax shall be 
levied at the rate of ly^, per centum per annum: Provided 
further, That no additional circulating notes shall be issued 
whenever and so long as the amount of such reserve falls 
below ssVz P^"^ centum of its outstanding notes. 

Sec. 42. In computing the demand liabilities of the 
National Reserve Association a sum equal to one-half of 
the amount of the United States bonds held by the associa- 
tion which have been purchased from national banks, and 
which had previously been deposited by such banks to secure 
their circulating notes, shall be deducted from the amount 
of such liabilities. 

This is designed to make it appear that a 50 per cent 
reserve of actual gold will be behind the corporate cur- 
rency. But in fact the bill does not make necessary one 



56 UNITED STATES MONEY vs. 

dollar of actual gold. Wall Street and the big banks fofced 
Congress to adopt the gold standard, and now this bill 
leaves the entire burden of maintaining the gold standard 
and insuring gold payments upon the Government instead 
of upon this corporation that is to issue the public currency 
without limit and get the profits therefrom. 

No tax is imposed if a 50 per cent reserve is maintained. 
If the reserve should fall, say to 33J^, a tax equal to about 
9 per cent per annum is required, but only on the deficiency 
below the 50 per cent reserve while so deficient. But this 
is not a serious burden because the Association would be 
getting from the banks say 3 per cent interest on corporate 
currency amounting to three times such reserve deficiency, 
which lets the Association out even. But it enables the 
banks to inflate their credit loans ten times such amount 
of currency and thirty times such reserve deficiency. And 
all that it costs the banks is 3 per cent per annum for tfie 
use of such corporate currency put into their cash reserves. 

Sec. 41 says, "A reserve of gold * * * ^j. other 
money," etc. Now, "other money" includes the $346,000,- 
000 of greenbacks, about $900,000,000 of gold certificates 
and a large amount of silver dollars and certificates, or be- 
tween 1,200 and 1,500 million dollars, most of which is in 
the reserves of the banks now. This government paper 
money, under this bill, can be used instead of gold by the 
association as a "reserve" tp secure its corporate currency, 
and there is enough of such Government currency, if ac- 
quired by the association, to enable it to issue nearly $3,000,- 
000,000 of its corporate currency, an amount nearly equal 
to all the money, gold, silver, greenbacks, gold and silver 
certificates and bank-note currency now in circulation, held 
by banks and possessed by the Government. Thus the way 
is opened for an unlimited inflation of corporate paper 
currency issued by a mere private corporation with relatively 
small net assets and no Government guarantee, every dollar 
supposed to be redeemable in gold, but with not a single 
dollar of gold necessarily held in the reserves of such cor- 
poration to accomplish such redemption. It is proposed to 
force the Government to provide all the gold by having 
the law keep all Government currency redeemable in gold^ 
When the corporation wants gold it will take Government 
currency, present it for redemption and demand the gold. 
If the Government does not have the gold, the gold stand- 
ard law of March 14, 1900, requires it to sell its bonds and 



CORPORATE CURRENCY 57 

buy the gold needed. So the entire burden is on the Gov- 
ernment and the profits go to the banks. 

This is wildcatting. It will lead to inflation and a depre- 
ciated paper currency, for the people will not take it at 
par without Government guarantee. Under Sec, 42 no 
reserve of any kind behind half the bonds taken over and 
the bank-note currency with such bonds is required. 

Under Sec, 41 no tax is paid if the reserve of gold or 
"other money" is kept up, and only a nominal tax in any 
case. A 33}^ per cent reserve is legalized, and if the re- 
serve to secure the corporate currency goes below that, or 
is wiped out entirely, there is no remedy in the hands of 
the Government or in the people who may then hold a 
billion or more dollars of this wildcat corporate currency, 
except that the printing press shall be stopped and no more 
currency notes issued. But suppose the association don't 
stop? Suppose it prints and emits five, ten or fifty billion 
dollars of this wildcat corporate paper currency, not guaran- 
teed by the Government, and without a dollar of gold or 
anything else to secure it ? The bill fixes no limit in quan- 
tity and provides no penalty for violations, and all "thou 
shalt nots" in the law unenforced by penalties usually are 
ignored by bankers. This is the wildest, most unsafe and 
unsound currency plan ever suggested to Congress. Even 
free silver coinage was vastly more safe and sound, for the 
Government was behind every silver dollar and pledged to 
maintain it at par, and the silver in each dollar is worth 53 
cents as bullion ; but the paper and ink as such in this cor- 
porate currency will be worthless. 

Sec. 43. The National Reserve Association shall make 
a report, showing the principal items of its balance sheet, 
to the Comptroller of the Currency once a week. These 
reports shall be made public. In addition, full reports shall 
be made to the Comptroller of the Currency by said associa- 
tion coincident with the five reports called for each year 
from the national banks. 

Sec. 44. All subscribing banks shall, under regulations 
to be prescribed by the National Reserve Association, make 
a report monthly, or oftener if required, to said association 
showing the principal items of their balance sheets. 

Sec. 45. All reports of national-bank examiners in re- 
gard to the condition of banks shall hereafter be made in 
duplicate, and one copy shall be filed with the National 



58 UNITED STATES MONEY vs. 

Reserve Association for the confidential use of its executive 
officers and branch managers. 

Sec. 46. The National Reserve Association may accept 
copies of the reports of the national-bank examiners for 
subscribing natioMl banks and also copies of the reports 
of State-bank examiners for subscribing State banks and 
trust companies, in States where the furnishing of such in- 
formation is not contrary to law: Provided, however, That 
the standard of such examinations, both National and State, 
meets the requirements prescribed by the National Reserve 
Association, The National Reserve Association shall have 
the right at any time to examine or cause to be examined 
by its ozvn representatives any subscribing bank. The 
National Reserve Association may make such payments to 
national and State examiners for such services required of 
them as the directors may consider just and equitable. 

This private corporation through examiners and reports 
is to have its nose in the private business of every indi- 
vidual and corporation that deals with banks. And no 
effective way is provided to prevent this information being 
communicated to, and used by, the special interests of Wall 
Street. Espionage into everybody's affairs and improper 
use of the confidential information will be possible. Not 
only will the central bank get copies of the reports of all 
banks and bank examiners, but each bank must make a 
monthly report and special reports when required, and per- 
mit agents of the central bank any time to investigate every 
detail of the bank's business and operations. Every bank 
must disclose everything to the central bank and then obey 
its orders or be "suspended," blacklisted. 

Sec. 47. All provisions of law requiring national banks 
to hold or to transfer and deliver to the Treasurer of the 
United States bonds of the United States other than those 
required to secure outstanding circulating notes and Gov- 
ernment deposits are hereby repealed, 

(A little provision for the benefit of the banks.) 

Sec. 48. There shall be no further issue of circulating 
notes by any national bank beyond the amount now out- 
standing. National banks may maintain their present note 
issue, but whenever a bank retires the whole or any part of 
its existing issue its right to reissue the notes so retired shaH 
thereupon cease. 

This is to open the way for the association's corporate 
currency, from which the federated banks will in one way or 



CORPORATE CURRENCY 59 

another make much more profit than from present bank- 
note currency. 

Sec. 49. The National Reserve Association shall, for a 
period of one year from the date of its organization, offer 
to purchase at a price not less than par and accrued interest 
the 2 per centum bonds held by subscribing national banks 
and deposited to secure their circulating notes. The Na- 
tional Reserz'e Association shall take over the bonds so 
purchased and assume responsibility for the redemption upon 
presentation of outstanding notes secured thereby. The 
National Reserve Association shall issue, on the terms herein 
provided, its own notes as the outstanding notes secured by 
such bonds so held shall be presented for redemption and 
may issue further notes from time to time to meet business 
requirements, it being the policy of the United States to 
retire as rapidly as possible, consistent with the public 
interests, bond-secured circulation and to substitute therefor 
notes of the National Reserve Association of a character 
and secured and redeemed in the manner provided for in 
this act. 

October 31, 191 1, there was $744,071,715 of bank-note 
currency outstanding on an equal quantity of United States 
bonds deposited as security, the banks getting 2 per cent 
interest on the bonds and say 6 per cent for use of the 
currency loaned to the people, less a Government tax of 
y2 per cent. 

The association, owned by and for the benefit of the banks 
exclusively, will quickly "purchase" from the banks all these 
bonds, getting therewith the currency privilege. This can 
be done without a dollar of money. The banks by an as- 
signment written on the receipts given when the bonds were 
deposited with the treasury can transfer the $744,071,715 
of bonds to the association and for their pay can keep, 
loan out and permanently use the $744,071,715 of bank- 
note currency now held by the banks against such bonds. 
Or, the association's corporate currency may be issued in 
place of such bank-note currency. The association, which 
is but the banks themselves in federated form, agrees to 
"redeem" such bank-notes if any of them happen to be 
presented for redemption, in which case they will be paid, 
not in gold or "lawful money" but in corporate currency of 
the association, the product of its printing press. The asso- 
ciation then, under Sec. 55, can require the Government to 
take back these 2 per cent bonds and give in exchange 3 



6o UNITED STATES MONEY vs. 

per cent bonds running fifty years, an increase of 50 per 
cent in the annual interest expenses of the Government. 
The 3 per cent fifty-year U. S. bonds, even without any cur- 
rency issuing privilege, should now, or soon will, sell on a 
2 per cent or 2>^ per cent interest basis. If at 2^ per cent, the 
$744,071,715 of 3 per cent fifty-year bonds so obtained by 
the association would at once increase about one-sixth in 
value and be worth a premium above par amounting to 
$124,012,000. This net profit for the association would be 
equal to 124 per cent on the entire $100,000,000 paid in by 
all the banks for its capital stock. No wonder former Sec- 
retary of the Treasury Shaw said, as reported, that private 
interests could afford to pay a billion dollars for such a 
charter from Congress. Note particula<rly that Congress, by 
Sec. 49, would solemnly bind the Government and the faith 
of the United States to the permanent "policy" of a private 
corporate paper currency, to "notes of the National Reserve 
Association of a character and secured and redeemed in the 
manner provided for in this act." This would be the begin- 
ning of the downfall of all Government currency of every 
kind and the ultimate substitution of mere corporation 
paper currency issued by and for the exclusive profit of a 
private banking syndicate. That is the big issue presented 
by this bill: "Government money vs. corporate cur- 
RENCY.^^ The fight will center around this one proposition. 
There is little else in the bill. There should be no com- 
promise. The country must have all Government or all 
corporate currency. The chief aim of the promoters of 
this measure was to impose upon the United States cor- 
porate currency exclusively and get control of its volume 
into their own private hands. 

Sec. 50. All note issues of the National Reserve Asso- 
ciation shall at all times be covered by legal reserves to the 
extent required by section forty^one of this act and by notes 
or bills of exchange arising out of commercial transcu:tions 
as hereinbefore defined or obligations of the United States. 

The word "and" may make "notes or bills of exchange" 
usable in the "reserve" in place of "gold and other money." 

Sec. 51. Any notes of the National Reserve Association 
in circulation at any time in excess of $900,000,000 which 
are not covered by an equal amount of lawful money, gold 
bullion, or foreign gold coin held by said associoHon, shall 
pay a special tax at the rate of 1^2 per centum per annum, 
and any notes in excess of $1,200,000,000 not so covered 



CORPORATE CURRENCY 6i 

shall pay a special tax at the rate of 5 per centum per 
annum: Provided, That in computing said amounts of 
$900,000,000 and $1,200,000,000 the aggregate amount of 
any national-bank notes then outstanding shall be included. 

No tax is paid on the first $900,000,000 of corporate 
currency, and none on currency in excess of that huge 
figure if the excess is "covered" as provided. If the bill 
becomes law the next Congress no doubt will be asked to 
amend the act and turn over to the association, subject to 
the outstanding certificates, the nearly one billion dollars of 
gold held in trust by the Government, and the $150,000,000 
gold reserve in the Treasury. The $346,000,000 of green- 
backs then would be burned up and corporate currency issued 
in their place. This we believe is part of the agreed pro- 
gram, but is being kept out of sight for prudential reasons, 
to stifle opposition that might kill the whoh scheme. It is 
the same old fight that has been on constantly between the 
banks and the people for fifty years. This time, however, 
it takes a vastly more daring and dangerous form than ever 
before. 

Sec. 52. The circulating notes of the National Reserve 
Association shall constitute a first lien upon all its assets and 
shall be redeemable in lawful money on presentation at the 
head oMce of said association or any of its branches. It 
shall be the duty of the National Reserve Association to 
maintain at all times a parity of value of its circulating 
notes with the standard established by the first section of the 
act of March 14, ipoo, entitled "An act to define and fix the 
standard of value, to maintain the parity of all forms of 
money issued or coined by the United States, to refund the 
public debt, and for other purposes" 

Corporate currency can be redeemed in greenbacks in- 
stead of gold, for both are "lawful money." So are silver 
dollars, the present bullion value of which is about 53 cents 
on the dollar. Is it not amusing to see the very interests 
that in 1896 opposed free coinage of silver by the Govern- 
ment when the bullion value of silver was 53 cents on the 
dollar, now they devoutly "pray" for free coinage of paper 
and ink by their private corporation to the extent of more 
than a billion dollars, the paper and ink as such being 
worthless? It is made the "duty" of the association to 
maintain its notes on aparity with gold. But suppose it 
don't, won't or can't? Tliere is no penalty imposed or rem- 
edy provided. The "duty" is meaningless and impotent. 



62 UNITED STATES MONEY vs. 

Sec. 53. The circulating notes of the National Reserve 
Association shall he received at par in payment of all taxes, 
excises, and other dues to the United States, and for all 
salaries and other debts and demands owing by the United 
States to individuals, firms, corporations, or associations, 
except obligations of the Government which are by their 
terms specifically payable in gold, and for all debts due from 
or by one bank or trust company to another, and for all 
obligations due to any bank or trust company. 

Corporate currency is to be only a "limited legal-ten- 
der," not a full legal-tender for all debts, public and private, 
between individuals, or between ordinary corporations and 
individuals. The $50,000,000 of greenbacks issued under 
acts of July 17 and August 5, 1861, were made "full legal- 
tender" by act of March 17, 1862, and never depreciated 
but always were equal with gold in value. The $450,000,- 
000 of greenbacks issued under acts of February 25, 1862, 
July II, 1862, and March 3, 1863, were made only a "lim- 
itel legal-tender" at the demand of the Wall Street finan- 
ciers engaged in corneriog the gold and forcing the Gov- 
ernment to pay ruinous prices for it to carry on the war 
to preserve the Union. These "limited legal-tenders," 
although an obligation of the Government, depreciated to 
less than 50 cents on the dollar. Will not corporate cur- 
rency that likewise is only a "limited legal-tender," and 
does not even have the obligation of the Government be- 
hind it, also depreciate? No person will be obliged to ac- 
cept corporate currency when tendered in payment of a 
private debt, because it is not a "full legal-tender." This 
will make it less valuable and cause ultimate depreciation, 
after it has been floated at par out into the hands of the 
people, like the oceans of watered Wall Street stocks, and 
the people will be the losers. It is a step toward returning 
to the old wildcat corporate currency that generally pre- 
vailed prior to i860, when 10,000 different kinds of cor- 
porate currency notes were issued by the banks of the 
country without any Government credit behind them, and 
most of this corporate currency became utterly worthless, 
entailing frightful losses on the people and demoralizing all 
business. 

Sec. 54. The National Reserve Association and its 
branches shall at once, upon application and without charge 
for transportation, forward its circulating notes to any 
depositing bank against its credit balance. 



CORPORATE CURRENCY 63 

This IS for the benefit of the banks. 
Sec. 55. Upon application of the National Reserve Asso-- 
elation the Secretary of the Treasury shall exchange the 

2 per centum bonds of the United States bearing the circu- 
lation privilege purchased from subscribing banks for j per 
centum bonds of the United States without the circulation 
privilege, payable after fifty years from the date of issue. 
The National Reserve Association shall hold the 3 per 
centum bonds so issued during the period of its corporate 
existence: Provided, That after five years from the date of 
its organisation the Secretary of the Treasury may at his 
option permit the National Reserve Association to sell not 
more than $50,000,000 of such bonds annually: And pro- 
dded further. That the United States reserves the right at 
any time to pay any of such bonds before maturity, or to 
purchase any of them at par for the trustees of the postal 
savings, or otherwise. 

Sec. 56. The National Reserve Association shall pay to 
the Government a special franchise tax of Ij4 per centum 
annually during the period of its charter upon an amount 
equal to the par value of such United States bonds trans- 
f erred to it by the subscribing banks. 

Sec. 55 IS discussed following Sec. 49 above. The tax, 
Sec 56, is to offset the difference between 2 per cent and 

3 per cent bond interest and J/2 per cent in place of the 
present circulation tax on bank-note currency. If the banks 
decide not to turn their U. S. bonds over to the association, 
but retain and continue to enjoy their present currency 
privilege, as they are authorized by Sec. 48 to do, then the 
Government will get nothing under Sec. 56. If the Gov- 
ernment pays the $744,000,000 of bonds, the proceeds held 
as "reserve" would form the basis of $1,488,000,000 to 
$2,732,000,000 corporate currency. If the bonds run the 
fifty years, the Government must pay as interest thereon 
$1,116,000,000. 

Sec 57. That banking corporations for carrying on the 
business of banking in foreign countries and in aid of the 
commerce of the United States with foreign countries and 
to act when required as fiscal agents of the United States in 
such countries may be formed by any number of persons, 
not less in any case than five, zvho shall enter into articles of 
association which shall specify in general terms the object 
for which the banking corporation is formed and may con- 
tain any other provisions not inconsistent with the provisions 



64 UNITED STATES MONEY vs. 

of this section which the banking corporation may see At to 
adopt for the regulation and conduct of its, business and 
affairs, which said regulations shall be signed, in duplicate, 
by the persons uniting to form the banking corporation and 
one copy thereof shall be forwarded to the Comptroller of 
the Currency and the other to the Secretary of State, to be 
filed and preserved in their offices. 

That the persons uniting to form such banking corpora- 
tion shall under their hands make an organisation certificate 
which shall specify, first, the name assumed by such banking 
corporation, which name shall be subject to approved by the 
Comptroller; second, the foreign country or countries or the 
dependencies or colonies of foreign countries or the depen- 
dencies of the United States where its banking operations 
are to be carried on; third, the place in the United States 
where its home office shall be located; fourth, the amount of 
its capital stock and the number of shares into which the 
same shall be divided; fifth, the names and places of resi- 
dence of the shareholders and the number of shares held by 
each of them, and, sixth, a declaration that said certificate is 
made to enable such persons to avail themselves of the 
advantages of this section. 

That no banking corporation shall be organised under 
the provisions of this section with a less capital than 
$3,000,000, zvhich shall be fully paid in before the banking 
corporation shall be authorised to commence business, ana 
the fact of said payment shall be certified by the Comptroller 
of the Currency and a copy of his certificate to this effect 
shall be filed with the Secretary of State: Provided, That 
the capital stock of any such bank may be increased at any 
time by a vote of two-thirds of its shareholders with the 
approval of the Comptroller of the Currency and that the 
capital stock of any such bank which exceeds $2,000,000 
may be reduced at any time to the sum of $2,000,000 by the 
vote of shareholders owning two-thirds of the capital. 

That every banking corporation formed pursuant to the 
provisions of this section shall for a period of twenty years 
from the date of the execution of its organisation certificate 
be a body corporate, but shall not be authorised to receive 
deposits in the United States nor transact any domestic 
business not necessarily related to the business being done 
in foreign countries or in the dependencies of the United 
States. Such banking corporations shall have authority to 
make acceptances, buy and sell bills of exchange, or other 



CORPORATE CURRENCY 65 

commercial paper relating to foreign business, and to pur- 
chase and sell securities, including securities of the United 
States or of any State in the Union, Each banking corpora- 
tion organised under the provisions of this section shall have 
power to establish and maintain for the transaction of its 
business a branch or branches in foreign countries, their 
dependencies, or the dependencies of the United States, at 
such places and under such regulations as its board of 
directors may deem expedient. 

A majority of the shares of the capital stock of such bank- 
ing corporation shall be held and owned by citizens of the 
United States or corporations chartered under the laws of 
the United States or of any State of the Union, and a 
majority of the members of the board of directors of such 
banking corporations shall be citizens of the United States. 
Each director shall own in his oivn right at least one hun- 
dred shares of the capital stock of the banking corporation 
of which he is a director. 

Whenever the Comptroller shall become satisfied of the 
insolvency of any such banking corporation he may appoint 
a receiver who shall proceed to close up such corporation 
in the same manner in which he would close a national bank, 
the disposition of the assets of the branches to be subject to 
any special provisions of the laws of the country under 
whose jurisdiction such assets are located. 

The annual meeting of every such banking corporation 
shall be held at its home oMce in the United States, and 
every such banking corporation shall keep at its home office 
hooks containing the names of all stockholders of such bank- 
ing corporation and members of its^ board of directors, 
together with copies of the reports furnished by it to the 
Comptroller of the Currency exhibiting in detail and under 
appropriate heads the resources and liabilities of the banking 
corporation. Every such banking corporation shall make 
reports to the Comptroller of the Currency at such times as 
he may require, and shall be subject to examinations when 
deemed necessary by the Comptroller of the Currency 
through examiners appointed by him; the compensation of 
such examiners to be fixed by the Comptroller of the 
Currency. 

And such banking corporation may go into liquidation 
and be closed by the vote of its shareholders owning two- 
thirds of its stock. 

Any bank doing business in the United States and being 



66 UNITED STATES MONEY vs. 

the oivner of stock in the National Reserve Association may 
subscribe to the stock of any banking corporation organized 
under the provisions of this section, but the aggregate of 
such stock held by any one bank shall not exceed lo per 
centum of the capital stock of the subscribing bank. 

This IS practically a separate federal incorporation law. 
It is enormously broad and dangerously lax. It should not 
be a part of this bill at all. Evidently it was tacked on at 
the instance of powerful Wall Street interests that desire 
to incorporate their foreign financial operations under the 
protection of federal law so that they can invoke the aid 
of the diplomatic and consular representatives of the Gov- 
ernment, "dollar diplomacy," to further their games of 
international high finance. It has no necessary connection 
with this bill. By slipping it in here instead of in a sepa- 
rate bill it can not be repealed for fifty years. This would 
make Wall Street banks incorporated thereunder almost 
legally immortal. 

Sec. 58. Congress reserves the right to alter or amend 
the provisions of this act to take effect at the end of any 
decennial period from and after the organization of the 
National Reserve Association, 

^'Decennial" means "tenth anniversary." If this bill be- 
comes law there will be no power on earth that can amend 
this act against the will of the association for ten years, 
and during successive periods of ten years. This amend- 
ing clause is unusual, impertinent, insolent and dangerous. 
Congress is asked to tie its own hands and make this pri- 
vate corporation above and independent of Government 
and the people, under any and all circumstances that may 
arise during that time. Before ten years, during this long 
period of immunity, no doubt the corporation and the fed- 
erated banks will by means of the enormous advantages 
granted by this bill obtain such political mastery over the 
Government and the people that all changes thereafter made 
will be for the benefit of the association and its allied banks, 
and not for the people. This provision startlingly reveals 
the character or lack of character and fairness of the pow- 
erful and crafty special interests. Wall Street and the big 
banks, allied in a great conspiracy for promoting this pri- 
vate central bank bill through Congress. 

It was a surprising argument of the President in his 
message to Congress on December 21, 191 1, in effect sug- 
gesting that Congress need not hesitate or be over-par- 



68 UNITED STATES MONEY vs. 

ticular, because if after the law is passed it is discovered 
that a mistake has been made, the law can be amended. In 
other words, pass the bill first and look into it afterwards 
and correct by amendment any mistakes made. This is 
strange doctrine for a learned judge, the trusted executive of 
the republic. If he saw this amending clause, Sec. 58, before 
writing his message, it is astounding. If he did not, the 
man who, if anybody, induced him to insert in his official 
message to Congress that suggestion, which was calculated 
to put the people to sleep and unduly hasten careless action 
on the measure by Congress, grossly deceived the President 
bv concealing from him the language of this amending 
clause that makes the President's suggestion ridiculous. 
This bill introduced into Congress by the Monetary Com- 
mission on January 8, 1912, no doubt was completed long 
before the President wrote his message of December 21, 
191 1. It is to be hoped that the President will inform 
Congress whether he had seen Sec. 58 before writing his 
advice to Congress, and if not, then he should state whether 
Chairman Aldrich, of the Monetary Commission, while con- 
cealing this amending clause, induced the President to in- 
' elude in his message the suggestion mentioned. Congress 
is entitled to this information. It is also entitled to definitely 
know whether other suggestions on this subject in the 
President's message were proposed to him by any member 
of the Monetary Commission. The usual reservation by 
Congress of the right to repeal this act is nowhere in this 
bill. There will be no power in Government or the people 
to get rid of this corporation for fifty years, for it will be a 
"vested right." 

Sec. 59. All acts or parts of acts inconsistent with the 
provisions of this act are hereby repealed. 

This is very broad and sweeping. It should be exam- 
ined carefully to find just what laws or parts of laws will 
be wiped out. 

"Selfishness defeats itself," is ah old wise saying. It is 
likely to prove true in this case. In trying, figuratively, to 
corner the whole earth with the provisions of this one bill, 
the greedy interests are likely to fail to secure enough for 
a cemetery lot in which to bury their blasted hopes. 



CHAPTER III. 
FOOLING THE PEOPLE. 

Bulk Reserves to Be Left in Wall Street, Not Put in CentnJ 

Reservoir? 

Mr. Frank A. Vanderlip, president of the National City 
Bank of New York, on February 25, 191 1, delivered an ad- 
dress on "The Aldrich Plan for Banking Legislation/' be- 
fore the Commercial Club of Chicago, praising the plan 
without qualification. He has been a consistent advocate 
of a central bank for ten years, ever since he retired as 
Assistant Secretary of the Treasury, and became vice-presi- 
dent of the great "Standard Oil" Bank. He was one of 
the five members of the "Special Committee of the New 
York Chamber of Commerce" that originated and devised 
the first plan for a central bank, adopted by that body on 
October 4, 1906, hereinafter fully described. And that 
first plan and the present Aldrich plan are practically iden- 
tical as to their functions and powers. 

The plan of 1906 called it a "Central Bank,'* the plan of 
1912 a "National Reserve Association;" but a pickle by 
any other name is just as sour. The said report of 1906, 
signed by Mr. Vanderlip, says on page 9 : 

"In our opinion the best method of providing an elastic 
credit currency, the volume of which could never be exces- 
sive, would be the creation of a central bank of issue under 
the control of the Government. This central bank should 
have branches in the leading cities, and should have deal- 
ings only with banks, although its capital stock might be 
privately owned or distributed among the banking institu- 
tions of the country, it should be under the direct control 
of a board of governors appointed, at least in part, by the 
President of the United States, for it should perform some 
of the functions now imposed upon the United States 
Treasury, and should at the same time be managed not 
exclusively for private gain, but for the public good as 

69 



TO UNITED STATES MONEY vs. 

well." On page 24 the report says; '7n its management 
representatives of the government shall be supreme/' 

That report was a reasonable, logical, statesmanlike^ utter- 
ance. We take it as the guide in the plan hereinafter sug- 
gested, accepting in detail practically all of its provisions. 
Will the gentlemen who originated that plan join us now on 
that basis? Or will they insist on blocking all legislation 
unless they can put through the Aldrich plan for a Private 
Central Bank or association controlled by the banks instead 
of the Government? 

Were those gentlemen insincere, not frank, in 1906, or 
have they backslid since? We prefer to believe tha^t they 
have changed their minds, perhaps due to the fact that since 
1906 the riches and power of Wall Street have grown so 
enormously that they now seem to consider Wall Street and 
its banks of more consequence than the United States Gov- 
ernment and its 94,000,000 people. 

Mr. Vanderlip in his Chicago address strongly urges the 
present Aldrich plan. He reverses his 1906 position. In 
that speech, which is being sent out by the banks as a cam- 
paign document, on page 8 he says: "We are now more 
than amply supplied with reserves. The difficulty is not in 
amount, but in mobility. * * * 

Today the secondary reserves of the banks of the whole 
nation flow to one center and must of necessity be employed 
in one way. Such part of our banking funds as experience 
has taught may be needed on instant notice can be loaned in 
just one place in the United States where the lender can get 
them back with substantial certainty on demand. That place 
is Wall Street." 

This foremost of Wall Streefs bankers thus confesses that 
under the reserve law the country's cash goes to New York 
and is loaned in Wall Street, And he says the greatest 
danger is this lack of mobility of bank reserves. And yet 
he is urging the Aldrich bill that leaves the reserve law as 
it is and the country's money in Wall Street. It seems 
strange that the 24,000 banks are unwilling for the safety 
of the public and depositors, who furnish them most of the 
money, to hold $1,500,000,000 in their vaults or in a central 
"reservoir" and out of Wall Street when by law they have 
been given a monopoly of the rich privilege under which on 
a total capital stock of two billions they have loaned to the 
people at 6 per cent or other going rate a total of twenty- 
three billions, most of it being mere credit, inflated financial 



CORPORATE CURRENCY 71 

wind, that costs the banks nothing. The fact is the banks 
hope that by getting control of the public currency they can 
print money enough to protect the banks in emergencies 
without taking the reserves away from Wall Street. Instead 
of using, their own capital and consolidating their reserves 
for mutual protection, they are going to keep their own 
money busy making profits in Wall Street and let the private 
central reservoir be filled with a billion dollars of public 
currency furnished free by act of Congress. Mr. Vanderlip 
adds: "I would, then, say that the four things we must seek 
to accomplish by a properly designed financial measure are, 
first, mobility of reserves; second, elasticity of note issue; 
third, certainty that solvent banks can rediscount; and, 
fourth, the creation of a discount market." 

The first, enforced mobility of ordinary cash reserves, has 
been abandoned. The third, rediscount, and fourth, a dis- 
count market, can easily be furnished under the present law 
by the banks themselves without any action by Congress. 
They can without new legislation incorporate a big central 
bank to rediscount for other banks. And no one in the 
United States would object. The second, issuing of cur- 
rency, is the only thing left. It is the one important thing 
in the pending bill that can not now be done by the banks 
without new legislation. Therefore, it is the sole object of 
the Aldrich plan and of the entire campaign being waged by 
Wall Street and the banks. It is the one thing that should 
not be done. The main thing that should be accomplished 
is to reform the reserve system ; but that is left out entirely. 
And this is called "reform" I 

Writer foresaw that this would be the program when, 
at the National Civic Federation meeting in New York on 
December 17, 1907, he forced from the Wall Street bankers 
present, through Mr. Seligman, chairman of the committee 
on resolutions, a public admission that they sought private 
control of the public currency, when they opposed writer's 
amendment which read : 

"Provided, That power to issue and regulate the 

VOLUME of the PUBLIC CURRENCY SHALL NOT BE TAKEN 
AWAY FROM THE FEDERAL GOVERNMENT AND BE PUT INTO 
PRIVATE HANDS." 

With all the dense dust kicked up by Aldrich, the banks 
arid Wall Street to hide the real issue now blown away, and 
the actual bill brought out of hiding and into the spot-light 
of public congressional scrutiny, investigation and criticism, 



J2 UNITED STATES MONEY vs. 

the Aldrich plan, stripped of "tentativeness" and mystery, is 
found to seek just one new thing, namely, private control 

OF THE PUBLIC CURRENCY. 

In "The Magnet," written in 1906 and 1907 to combat this 
measure, we warned the country that private control of the 
public currency was to be attempted. Writer gave the same 
warning on December 17, 1907, at the National Civic Fed- 
eration meeting when a majority present were Wall Street 
bankers and their friends, and in his petition read to the 
Senate and printed in the Congressional Record February 
10, 1908, in his address on "Wall Street and Its Currency 
Measures" before the Boston City Club March 5, 1908, in 
his argument against the Aldrich emergency currency bill, 
a measure paving the .way for the central bank scheme, 
delivered on invitation before the House Banking and Cur- 
rency Committee in Washington, on April 16, 1908, in his 
speectv on "Panics, Their Causes and Cure," before the 
National Reform Association at Wilmington, Del., on June 
4, 1908, in many articles and interviews on the subject sent 
over news association wires and printed throughout the 
country in the public press, and in personal interviews with 
and letters to President Roosevelt and President Taft, 
judges of the Supreme Court, senators, congressmen, gov- 
ernors and many other public men. 

^ That author's fears were justified and his early informa- 
tion accurate, the pending Aldrich bill is convmcing and 
conclusive evidence. It is just a private grab at the public 
currency. The warnings that at the time to many seemed 
over-radical, now are found to have been rational and 
conservative. 

Whatever sentiment there may be favorable to the Aldrich 
plan among the masses of the people has been almost wholly 
created by the plausible and convincing argument that all 
bank reserves should be taken out of Wall Street and 
merged into one central reservoir, to be drawn upon for 
adequate relief in an emergency by any bank located any 
place in the United States. 

For years this has been heralded broadcast through the 
public press by the Monetary Commission (specifically 
stated in their report to Congress) by high government 
oflicials, in the speeches of President Aldrich and many 
leading bankers and by letters and literature now being 
circulated throughout the country by the big banks and the 
American Bankers* Association. The very name "National 



74 UNITED STATES MONEY vs. 

Reserve Association" was selected for the same purpose, to 
convey that impression to the people. That the whole 
argument is a cheat and fraud upon the people and Congress 
is proved by the fact that the bill prepared by the Monetary 
Commission, hereinbefore given in full, does not contain a 
single provision requiring the banks to withdraw a cent from 
Wall Street or to deposit and maintain with the National 
Reserve Association, in the "Central reservoir," even one 
dollar of their $1,500,000,000 of "legal cash reserve." This 
revelation no doubt will shock the confidence of the whole 
country in the genuineness of the proposed "reform" in 
President Aldrich, and in the big banks and powerful Wall 
Street interests promoting the scheme for their own benefit. 
The chief curse and evil of the present banking system is the 
law that years ago was instigated by Wall Street, under 
which a large portion of the entire cash of the country held 
by the banks, nearly one-third of it, by means of the reserve 
system is concentrated in a few big Wall Street banks, 
where much of it is used by the stock gamblers to fleece the 
people in flotation schemes and dishonest manipulation of 
the prices of listed securities. And this Aldrich bill prac- 
tically makes no change in this reserve system. The banks 
of the entire country can go on depositing their "cash 
reserve" in Wall Street, and will do so, because Wall Street 
banks pay interest on such deposits and the National Reserve 
Association is prohibited from doing so. 

We now find that instead of merging their cash reserves 
in the central bank or association for mutual protection, 
there to be held ever ready for use at any point of danger, 
as loudly proclaimed, the banks are allowed to continue 
sending the same proportion (three-fifths) of all their re- 
serves to Wall Street hunting interest. And that instead 
of using or depending upon their own capital reserves, in 
case of trouble they propose to make the government supply' 
the capital or money to protect the 24,000 banks in emer- 
gencies, and to maintain the gold standard and rediscount 
for the exclusive benefit of the banks. This is to be done 
under act of Congress, the law of the land, with a public 
corporate currency issued and controlled by a private cor- 
poration owned by the banks themselves. Thus the great 
powers of government are delegated to a private banking 
syndicate and made to continuously enrich the banks at the 
expense of the people and to serve the evil ends of Wall 
Street. 



CORPORATE CURRENCY 75 

The present law permits a bank to deposit three-fifths of 
its 15 per cent "legal cash reserve" in a Central Reserve city 
bank. This bill does not require but merely gives the option 
to a bank to deposit the other two-fifths of its reserve H^that 
now must be held in cash in its vault) with the Reserve 
Association. The association uses this money to rediscount 
with, for the profit of all the banks. This plan puts every 
dollar of the bank at work earning .profits, three-fifths in 
Wall Street and two-fifths through the association. It gives 
the banks extra profits from use of the $600,000,000 now 
idle as reserve in bank vaults. 

Note that the association itself is not required to retain in 
Its own vaults, in the "Central Reservoir," as a reserve to 
protect the banks or their depositors, any of this $600,000,000 
representing two-fifths of the cash reserve money of all the 
banks. It can pay out every dollar of it for commercial 
paper, and such rediscounted paper thus becomes "reserve" 
instead of actual gold. Only corporate currency, made on 
the association's printing press, will be used for the pro- 
tective reserve. The law thus supplies money ad libitum to 
a private corporation solely for private profit and advantage. 
Why should it not be as proper for the Government by act 
of Congress thus to furnish gratis capital and credit without 
limit for other private corporations and individuals, as well 
as for the banks and their private association ? The whole 
scheme is a vicious graft of doubtful legality. 

In an address before the Economic Club of New York 
(widely circulated by the Monetary Commission), made by 
President Aldrich early in his campaign for his predeter- 
mined ''plan" (on November 29, 1909), in praising the 
Central Bank Systems of Europe, he said : "These Central 
Banks hold practically the entire specie reserves of all the 
banks and other financial institutions of their respective 
countries. * * * 'pj^g great diflference between foreign 
banking systems and our own is found in the concentration 
and mobilisation of reserves, which is the distinctive method 
of the European systems. * * * It is the policy of the 
joint-stock banks in times of stress to strengthen their 
reserves by increasing their balances at the central bank. 
* * * It matters not whether the use suggested is in 
London, Birmingham, or in Australia; this reserve can be 
drawn upon, as water is drawn from a great reservoir in 
order to put out a fire before it becomes a conflagration, and 



76 UNITED STATES MONEY vs. 

before the time when the application of water would be as 
useless as if it were poured into the ocean. 

The European banks take these matters at their inception, 
and, by means of a concentration of reserves, they are ready 
at any minute to furnish the necessary means and the neces- 
sary credits to prevent disasters such as those we have 
suffered, and from which we shall continue to suffer unless 
we do something to reorganize and strengthen our financial 
system." 

He praises the Central Bank system and then, to fool the 
Democrats, says the National Reserve Association will not 
be a Central Bank. Here we have President Aldrich threat- 
ening or predicting a return of heartrending panic, the ter- 
rors of which over and over he has publicly described and 
enlarged upon, unless Congress adopts his then concealed 
"plan." At the same time he leads the country to believe 
that his "plan" will require the zvithdrawal from Wall Street 
and concentration of the cash legal reserves of all banks in 
one central ^'reservoir/' When on January 8, 1912, the bill 
containing his real plan is reported to Congress by his 
monetary commission, no such thing is required of the banks. 

Former Congressman Robert W. Bonynge, a member of 
the Monetary Commission, now is traveling about the 
country and by speeches and interviews helping to promote 
the Aldrich plan. The Chicago Daily News on February 23, 
19 1 2, reported him as saying that the greatest evil of the 
present system is concentration of bank reserves in Wall 
Street, and that the Aldrich plan takes these reserves away 
from Wall Street and puts them in the Central Association 
as custodian. He spoke to the same effect in the speech 
made at St Paul, February 3, 19 12, now being circulated by 
the "National Citizens' League," the stated title of said 
speech being, "Reform Banking Legislation, A plan to 
Break Wall Street Control of American Finances.*' 

The evidence is conclusive, and the country now can see 
that. Is Aldrich, with the aid of his supine non-partisan" 
commission, the big banks, the Bankers* Association and 
Wall Street, trying to work on the people and Congress a 
clever, cold, heartless, gigantic and dangerous political con- 
fidence game? And it seems to be intended instantly to 
more than double the possiible earning power of all the 
banks by act of Congress. 

The play began way back in 1961 when in his report 
Secretary of the Treasury Gage began the argument for a 



CORPORATE CURRENCY ri 

central bank and concentration of bank reserves in one 
central reservoir. Mr. Gage went out of office and became 
president of a great Wall Street trust company. His assist- 
ant, Frank A. Vanderlip, went out of office and became 
vice-president, and now is president, of that great Standard 
Oil institution, the National City Bank, that had just pur- 
chased from the Government the old Custom House in Wall 
Street, which it now occupies for its bank purposes. That 
bank, or interests affiliated therewith, is the real originator 
and promoter of the Aldrich plan. As the deal has pro- 
gressed, a general concentration of banking capital and ' 
control has been effected until the various financial groups 
practically are all one and united in support of Aldrich, and 
they have made a deal through the terms of the "plan" 
changed to suit the big bankers by which the American 
Bankers' Association and the big national banks of the 
country have joined the alleged conspiracy or are co-operat- 
ing to drive the Aldrich scheme through Congress at all 
hazards and at the earliest possible moment, before Congress 
and the people come to realize the true character and ulti- 
mate effect of this evil measure. Because of the tremendous 
power of these great financial allies, reaching through the 
banks, railroads and trusts into every congressional district 
in the United States, there is danger, yes probability, that 
this bill, the greatest graft, the most sinister, far-reaching 
and dangerous measure ever presented to the Congress of 
the republic, will beccxne the law of the land. 

Then beware I The American people can be enslaved to 
the masters of high finance by Congress and the President, 
but they cannot permanently be kept in bondage. Must it 
l)e like France, ''After that, the deluge" f 



CHAPTER IV. 
A DISCOVERY. 

It the Govemment to b« Liable on a Billion Private Corporation 
Currency? Conflicting Statements by Bankers and Members 
of Monetary Commission. Great Inflation Bubble. 

President Aldrich, the monetary commission and the 
banks all have led the public to believe that the Govern- 
ment in no way will guarantee or pledge its credit to sustain 
the corporate currency of the National Reserve Association. 

The letters of the National City Bank and the National 
Bank of Commerce of New York and Continental and 
Commercial National Bank of Chicago, printed in the next 
chapter, expressly state that in no way will the Government 
be liable. 

Congress surely would not knowingly grant to a private 
corporation power to run the Government into debt more 
than a billion dollars for the exclusive benefit and profit of 
such corporation. It wpuld not make the Government a 
mere accommodation indorser and liable on a billion dollars 
or more of the circulating notes of the National Reserve 
Association, any more than it would grant to it power to 
issue without the consent of the Government a billion dol- 
lars of binding Government bonds and to sell the same, and 
forever keep the entire -proceeds and use same for the 
exclusive profit of such corporation. 

To settle this important matter authoritatively, writer 
mailed the following letter : 

"Milwaukee, Wis., Nov. 21, 1911. 

Hon. Nelson W. Aldrich, 

President National Monetary Commission, 
Washington, D. C. 

Dear Sir : Kindly have your office favor me with a copy 
of your revised monetary plan. 

Many doubt whether currency issued by the proposed 
National Reserve Association will be accepted at par unless 

78 



CORPORATE CURRENCY 79 

the faith and credit of the Federat Government is pledged 
to maintain it at par. Please state whether or not it is 
intended that the Government shall be obligated. 

Under your plan will a bank receive the minimum divi- 
dend of 4 per cent on the face of its subscription to Na- 
tional Reserve Association stock, or on only the cash actually 
called in on such subscription? 

Thanking you, I remain, 

Very truly yours, 

Alfred O. Crozier/^ 

This was a civil letter to President Aldrich officially on a 
relevant subject. It called for an answer under every rule 
and practice of the public service. It was ignored. Why ? 

At the time, writer believed the apparent desire of Presi- 
dent Aldrich to evade committing himself meant that before 
the bill finally passed, an amendment pledging the Govern- 
ment credit to the corporate currency would be inserted. 
Or, that in later years this would be done, after a billion or 
more currency had been put into circulation and depreciated. 
Failing to get any reply from Chairman Aldrich, writer 
tried to get the information from the other members. A 
similar inquiry addressed to Senator Burton, a member of 
the monetary commission, brought only a reply from the 
commission's librarian saying: 

"I am directed by Senator Burton to reply to your letter 
of inquiry of January 27, 1912. The information you de- 
sire is set forth in the report of the National Monetary 
Commission of January 8, 1912, pp. 16-20, and in Sec. 52 
of the bill reported by the commission." 

The reference does not give the information asked, nor 
is it anywhere in the commission's report or bill. 

The following reply to the above letter of the Commis- 
sion's Librarian was not answered. It was ignored : 

"The Romaine, Middleton Avenue, 

Cincinnati, O., Feb. 3, 191 2. 

National Monetary Commission, Washington, D. C. 
"Gentlemen : Your reply to my letter to Senator Burton 
and the copy of the commission's report and bill are re- 
ceived. I do not see that the sections you cite, or in fact any 
other section of the bill specifically states either that the 
Government will be or will not be in any way obligated or 
liable on the currency of the National Reserve Association, 
if the pending bill becomes law. 



« 



8o UNITED STATES MONEY vs. 

"Kindly advise me as to what is the fact on that point. 
Thanking you, I remain, 

"Very respectfully yours, 

"ALFRED O. CROZIER." 

Former United States Senator Julius Caesar Burrows, 
who is a member of the National Monetary Commission, 
writing to a gentleman on February 26, 1912, said: 

"Your valued favor of the 7th inst., you mailed to Kala- 
mazoo, and did not reach me until a few days since, hence 
the delay in reply. In your communication you inquire as 
to whether, *in case of the passage of the National Mone- 
tary Commission bill, the Government would be responsible 
for the currency issued by the National Reserve Associa- 
tion,' and in reply I would say that the Government would 
be in no way liable for the notes of the National Reserve 
Association. Provision is made, however, that the Govern- 
ment shall receive these notes at par in payment of all taxes, 
excises and other dues, and the redemption of the notes is 
insured by requirements as to reserve, and by provision that 
they shall have a first lien upon all of the assets of the Re- 
serve Association, including the uncalled liabilities of the 
stockholders." 

On January 31, 1912, writer met Robert W. Bonynge, a 
member of the Monetary Commission, who had addressed 
the Merchants and Manufacturers' Association of Mil- 
waukee on the Aldrich plan the previous evening. In re- 
sponse to a question, Mr. Bonynge then stated that the 
Government in no way would be obligated or made liable 
for the currency issued by the National Reserve Associ- 
ation. 

A similar inquiry written to the Secretary of the Treasury 
brought this reply : 

Office 

of 

Assistant Secretary. 

"Treasury Department, 
Washington, January 29, 1912. 
Mr, Alfred O. Crozier, 

The Romaine, Middleton Ave., 
Cincinnati, Ohio. 

Sir: In reply to your inquiry as to whether the faith 
and credit of the United States would be pledged to main- 
tain at par the currency issued by the National Reserve Asso- 



CORPORATE CURRENCY 8i 

ciation, if the pending bill framed by the National Monetary 
Commission should become law, I would say that this is a 
hypothetical question which the department cannot under- 
take to answer. 

Respectfully, 

A. Piatt Andrew, 
Assistant Secretary." 



TREASURY DEPARTMENT 

WASHIN9T0N 




Oi mmJMt UiddUttttt AMOtti, 
ClMllMAtl, Oliio< 

Sift 

za fw^ to yow iaqoiry m to «lifttkir tte f«lth oaA oitdit of th« 

iteitod SttttM would u lilodsM to asialida at par tte ourroaoy iosuod by tbt 

Natloatl Roatrvit AooooivtiOBg if tftt ptadiag bill fronod by tbo Natioiua 

K«Mtary COBniooloa sbould booow Vutf t vould oay that thia ia a hypottetioal 

QuHtioa vidob tha Oopartoast eaaaot uadartaka to aaawtr. 

Roapootfully , ^^„.,«^ 

Aoaiatoat 8aoratavy« 

Now, A. Piatt Andrew is not only Assistant Secretary 
of the Treasury, but he is also "assistant to the National 
Monetary Commission" and as such signed the commis- 
sion's report to Congress. Also, he has been making public 
addresses explaining and booming the Aldrich plan. He 
has been actively searching the records and helping to pre- 
pare the elaborate data issued by the commission. If any- 
one knows whether the Government would be legally liable 
for the corporate currency of the National Reserve Asso- 
ciation, he does. If he did not desire to answer that 



82 UNITED STATES MONEY vs. 



Karris H. We^b , Esq. | 

#1204 PXeasafit Street, 

wiXidlngton, ]>el« 
1^ dear 81r:« 

I teg to acknowledge the receipt of yours of 
February eighth, relating to the eur re ney which it is pro* 
posed shall be issued by the XTational tlesenre Association* 
The credit of the Oovernnent is not behind thi6 eircU* 
lation, but it is provided that it shall be redeeiuibltf in 
gold on presentation at the Beserve Asooeiation Or any of 
its branches, at any and all times* Further itt)re , in i8« 
suing this circulation one-half of its value tsust be in 
gold, in the hands of the Association, and the Other haliU 
fUlly covered by Govern&ent bonds or commerci'al paper, 
which must bo of the standard fixed by the terios of the bill* 
On the whole, I think it is agreed tliat it is amply covered, 
foid that there can be no possible failure of its redemption 
in gold, in case anyone desires it. Ho action is likely to 
be taken on the proposed bill at this session of Congref^s* 

Yours very truly, 



J^i^^^^A^^CtJ^^tT 




CORPORATE CURRENCY 83 

"hypothetical question" as Assistant to the Treasury, why 
did he not do it as assistant to the commission? Would 
not such palpgible evasion and the action of Chairman 
Aldrich in ignoring that question tend to make one sus- 
picious? Then there was Senator Burton's action. In- 
stead of answering "yes" or "no," he turns it over to the 
Librarian, who evades and gives an irrelevant answer. 
What is the game, if it is a game? The following from 
Congressman John W. Weeks, of Massachusetts, who was 
a member of the National Monetary Commission, explains 
itself: 

Here are more letters on the letterhead of the Monetary 
Commission : 

"Washington^ D. C, January 30, 1912. 
Mr. Alfred O. Crozier, 

The Romaine, Middleton Avenue, 
Cincinnati, Ohio. 

Dear Sir: Replying to your letter of the 27th instant, 
I write to say that the United States is not responsible for 
the parity of the currency issued by the National Reserve 
Association. That, as in the case of gold, silver and green- 
backs, is cared for by a statute which provides that the 
Secretary of the Treasury shall see that all forms of the 
circulating medium are kept at par. The subject is cov- 
ered in Sections 52 and 53 (pages 67 and 68) of the 
pamphlet, which has been sent to you by this mail, con- 
taining the report of the National Monetary Commission 
and the draft of a bill to cover the suggestions made 
therein. From a reading of the foregoing and those pro- 
visions, you will see that there is not the slightest danger. 

Very truly yours, 

H. D. Money, (a)" 

Former U. S. Senator Money, a member of the commis- 
sion, thus contradicts himself, as do other members. He 
first asserts that the Government will not be obligated for 
the corporate currency, and then says that under the (gold 
standard) statute the Secretary of the Treasury must keep 
such currency at par the same as gold, silver and green- 
backs. If the Secretary must under the Act of 1900 sell 
Government bonds to get gold to keep this corporate cur- 
rency at par, why will not the Government be legally 
obligated ? 



UNITED STATES MONEY vs. 



WASHINOrrON.DC. 

juawrr 30 - UU 
Ir. Alfrs* 0. 0tMl9t 

CUelnwlt, 0Uo> 

1 b«v* rettx Isttar koklng u« wb*tt«C 
tha tilth ud ertdlt of th* goir*TiUMiit aould bs pltdgM 
to ulntaln at pu tha eunancr t*M*a t>7 *>>• llatioul 
R*«Brv« Aaaoclstlon uodar tb« ptopoMd bill of tM 
Honstar/ Ccomlisloa.. 

1 I underatand it, tli9 not* lisua of tb* fiasMva 
would tiara tba eama lalatltm to tbs gOTeinoMit 
laauAd by ottlonal banka bava undsr tb« exlatinf 
y ondoratandinB of tba nnaneial Aot of 1900 ia 
Sacxetary of tba ttasaux? 1* raqulrad to nautata . 
' at par altb gold all outroncy laeuad b; tba sovsiniMnt or 
utidar its Butborlty, 






tiiat tbo S 



tba lasialatlon jiropoaad br tba HonatRiy Coanlaalon^la 
obltgad to Mlntaia its om notaa at pai altb gold. 
VWT truly youia. 



CORPORATE CURRENCY 8$ 

His reference to the bill gives no information on the sub- 
ject. His assurance, therefore, that there is not the "slight- 
est danger" must be taken with a "grain of salt." 

Congressman Edward B. Vreeland, vice-president of the 
National Monetary Commission, writes: 

"Washington, D. C, January 30, 1912. 
Mr. Alfred O. Crozier, 
The Romaine, 

Cincinnati, Ohio. 

Dear Sir: I have your letter asking me whether the 
faith and credit of the Government would be pledged to 
maintain at par the currency issued by the National Reserve 
Association under the proposed bill of the Monetary Com- 
mission. 

As I understand it, the note issue of the Reserve Asso- 
ciation would have the same relation to the Government 
that notes issued by national banks have under the existing 
law. My understanding of the Financial Act of 1900 is 
that the Secretary of the Treasury is required to maintain 
at par with gold all currency issued by the Government or 
under its authority. 

The marked difference, however, would be that under 
the legislation proposed b^ the Monetary Commission the 
Reserve Association is oblig^ to maintain its own notes at 
par with gold. 

Very truly yours, 

Edward B. Vreeland." 

Mr. Vreeland's first letter, we see, was on the letterhead 
of the National Monetary G^nmission. His second on the 
letterhead of the "Committee on Banking and Currency of 
the House of Representatives of the Sixty-second Con- 
gress," which shows the membership of sucn committee to 
be as follows : 

Arsene P. Pujo, La., Chairman. 

Carter Glass, Va. Robt L. Doughton, N. C. 

J. F. C Talbott, Md. Hubert D. Stevens, Miss. 



Geo. W. Taylor, Ala. 
John H. Moore, Tex. 
James P. Latta, Nebr. 



ames A. Daugherty, Mo. 
ohn J. Kindred, N..Y. 
ames F. Byrnes, S. C. 



Chas. A. Korbly, Ind. Edward B. Vreeland, N. Y. 

Wm. G. Brown, W. Va. Henry McMorran, Mich. 

Robert J. Buckley, Ohio. Geo. D. McCreary, Pa. 



86 UNITED STATES MONEY vs. 

Everis A. Hayes, Calif. Frank E. Guernsey, Me. 

James McKinney, 111. Philip P. Campbell, Kans. 

The members of the National Monetary Commission are: 
Nelson W. Aldrich, R. I., Chairman. 

Edward B. Vreeland, N. Y., Vice Chairman. 

Julius C. Burrows, Mich. Arsene P. Pujo, La. 

Eugene Hale, Me. H. D. Money, Miss. 

H. M. Teller, Colo. Geo. W. Prince, 111. 

Theodore E. Burton, O. James P. Taliaferro, Fla. 

Boies Penrose, Pa. L. P. Padgett, 

John W. Weeks, Mass. Geo. F. Burgess, 

Robt. W. Bonynge, Colo. James McLachlan, Mich. 

It will be seen that Chairman Pujo of the Committee and 
Vice Chairman Vreeland of the Commission are members 
of both bodies. Why, during the past three years, did not 
the Monetary Commission investigate the "money trust" 
as now it is proposed to have this committee do under the 
lead of a member of the Monetary Commission? It had the 
time, money and power to do so. No practicable monetary 
and banking system can be devised without taking into ac- 
count the conditions that would be revealed by an investi- 
gation of that kind if it was honest, thorough and patriotic. 
The character and contents of the Commission's bill shows 
that such conditions were ignored. Failure to require all 
bank reserves to be taken out of Wall Street and concen- 
trated in the Reserve Association as a "Central Reservoir" 
shows that by its plan the Commission intentionally or other- 
wise is playing directly into the hands of Wall Street. Will 
the proposed .investigation by the Banking and Currency 
Committee be genuine or a farce? The country soon will 
know. 

Mr. Vreeland's second letter is as follows: 

Washington, Feb. 9, 1912. 
Mr. Alfred O. Crozier, 

The Romaine, Middleton Ave., Cincinnati, Ohio. 

My Dear Sir: My answer to your former letter, saying 

that so far as the Government is concerned the notes issued 

by the National Reserve Association would have the same 

relation to the Government that our bank notes do, is not 



CORPORATE CURRENCY 87- 

clear because it has never been definitely decided what the 
relation of the Government is to the existing bank note 
circulation. 

You indicate in your letter that the Government stands 
behind the present bank note circulation, but does it? 
National banks are now permitted to issue their notes against 
certain bonds of the United States, mostly the 2 per cent 
bonds. These bonds are now terely above par. If they 
should fall below par it would be the duty of the Comptroller 
of the Currency to call upon the national banks to put up 
additional security. But suppose a bank should fail before 
the additional security was deposited and suppose its assets 
were insufficient to pay the bank notes outstanding; then 
there is no law upon the statute books which require the 
Government to make up the difference. Many people believe 
that these notes being issued against United States bonds 
under the authority of the Government, that in equity the 
Government should make up any loss which occurs. That 
would be entirely for Congress to determine, whether to 
make good or not. So I say that the notes of the new 
association stand in the same relation to the Government 
that the present bank note circulation does. 

I think notes issued by the Reserve Association would be, 
and would be considered to be absolutely safe by the people 
of the country. They would have behind them more than 
the present bank notes have. The Reserve Association 
would take over the seven hundred million 2 per cent bonds 
against which national bank notes are now issued. The 
Reserve Association could issue seven hundred millions of 
its own notes against these bonds, but it would also have 
to keep 50 per cent gold in its vaults in addition to the bonds 
of the United States. Also the notes are made a first lien 
against all assets of the association. 

We have more security by law behind them than France 
and Germany have behind their notes, which have been good 
under all circumstances for half a century. The notes of the 
Bank of France were at a discount of only 3 per cent when 
Prussian armies were marching in the streets of Paris and 
a communal mob was in possession of the Government. 

Our bank notes, resting upon bonds, were below par for 
sixteen years — 1863 to 1879. 

Very truly yours, 

Edward B. Vreeland. 



88 UNITED STATES MONEY vB. 

Following is writer's reply : 

The Romaine, Middleton Avenue, 
Cincinnati, O., Feb. 20, 1912. 

Honorable Edward B. Vreeland, 
Washington, D. C. 

Dear Sir: Please accept my thanks for your valuable 
reply of February 9 to my former letter. 

I quite agree that present bank note currency is not ideal 
and should be replaced with an elastic currency that will be 
more practicable. But it is imperative to avoid currency 
depreciation. You say bank currency was depreciated from 
1863 to 1879, Was that depreciation equal with greenbacks ? 
Bank notes I believe are not legal tender lawful money. Nor 
were the $450,000,000 of depreciated greenbacks a full legal 
tender. They could not be used to pay duties on imports 
or interest on the public debt, but the $60,000,000 of green- 
backs issued before the $450,000,000 were as I recall made a 
legal tender and never depreciated, but always were equaJ 
with gold in value. Is this correct? If so, then was not 
absence of legal tender quality the chief thing that caused 
depreciation of the $450,000,000 of greenbacks and also the 
bank note currency of which you speak ? If the $450,000,000 
of greenbacks had been full legal tender and redeemable in 
gold, do you think they would have depreciated ? 

You say there is no law upon the statute books obligating 
the Government for bank note currency. Did you overlook 
section 5414, as codified in section 148 of the Penal Code of 
the United States, March 4, 1909 (35 Stat. L. 11 15), or is it 
your view that it does not apply? If this does apply, the 
currency should be safe against depreciation. Would not 
the Reserve Association be a national bank and its currency 
national bank currency, legally speaking? Certainly it 
would not be a State bank or its issues State currency. If 
so, and the above cited statute applies and obligates the 
Government to maintain at par the Reserve Association's 
currency, there would seem to be no danger of it ever 
depreciating and inflicting the very grave evils any currency 
depreciation always imposes upon business and the people. 

Trusting it may be convenient for you to further advise 
as to the above matter, and thanking you, I remain, 

Very respectfully yours, 

Alfred O. Crozier. 



CORPORATE CURRENCY 89 

Mr. Vreeland, we believe, is a banker, congressman, 
member of the House Banking and Currency Committee 
and vice president of the National Monetary Commission. 
Excepting Aldrich, he has been the most active person 
behind the Aldrich private central bank plan. He should be 
thoroughly informed. He states that the Government will 
occupy the same relation to the corporate currency of the 
Reserve Association as it now does to bank note currency. 
If this be true, the Government will be directly obligated 
for every one of the billions of dollars of corporate currency 
such private corporation may care to print and issue during 
the next fifty years. Mr. Vreeland, we believe, is in error 
when he says the Government is not liable for bank note 
currency. Evidence of this fact is given later in this 
chapter. 

Even if the Government was not directly liable for the 
corporate currency, if it ever depreciated Congress would be 
importuned to maJce it good to protect the people from loss, 
the same argument given above by Congressman Vreeland 
as to why Congress should stand behind bank note currency 
would be used. The Government by law authorized the 
issuance of the corporate currency by the Reserve Associa- 
tion. By law it compelled its acceptance for certain pur- 
poses, and it would be considered in honor morally obligated, 
and later by act of Congress no doubt would be legally 
hound to guarantee and maintain at par all such currency 
even if it has to issue a billion dollars more bonds to get 
gold with which to do it. 

If Mr. Vreeland will read sections 41 and 42 of his bill 
he will find erroneous his assertion that the Reserve Asso- 
ciation must keep in its vaults 50 per cent ($350,000,000) of 
actual gold to secure its $700,000,000 currency issued 
against the $700,000,000 U. S. bonds to be taken over from 
the banks. No actual gold is required, and under section 42 
«o reserve of any kind need be held behind half of such 
$700,000,000 of currency. And it is not true that corporate 
currency will have behind it more than present bank cur- 
rency. It is unfair to take bank currency as a standard for 
comparison. Bank note currency is wrong and should be 
abolished, but not to make room for a worse currency. He 
says that the corporate currency is made "a first lien against 
all assets of the association." The association may issue 
$1,000,000,000 currency with only $100,000,000 actual net 
assets, except the assets bought with the billion of currency. 



90 UNITED STATES MONEY vs. 

So the "lien" would not be much security. It is important, 
however, to note that the Government is compelled to turn 
over all of its revenues to this private corporation to be at 
once mortgaged with a lien to secure this vast private cor- 
porate currency. The Treasury balance on June 30, 191 1, 
was $140,176,926, and sometimes it is double that sum. The 
whole scheme is rigged to give the benefits all to the banks 
and put the burden on the Government. 

His reference to France and Germany does not apply 
because in those countries the business and financial condi- 
tions are entirely different. They have no "Wall Street," 
or its evils. He says bank note currency from 1863 to 1879 
depreciated. He holds that the Government obligation was 
not behind bank currency. If that is true then the obligation 
of all the banks, plus 100 per cent U. S. bonds, securing 90 
per cent of bank currency was insufficient to keep bank 
currency at par. 

In 1879 there was only $329,691,697 bank note currency. 
If that small amount depreciated when fully secured by 
U. S. bonds, how can this private corporation keep a billion 
dollars of its currency from depreciating, without any Gov- 
ernment guarantee or U. S. bonds behind it, even if it 
should have 33 J^ per cent or even 50 per cent of gold as a 
reserve? But no actual gold is required. Paper money can 
be used. And if no reserve of any kind is kept, there is no 
penalty to punish the directors. 

Aldrich's Inflation Bubble. 

Under Sec. 41 of the bill no actual gold n^ed be held as 
a reserve to secure the corporate currency. There may be 
used "other money of the United States which the national 
banks are now authorized to hold as part of their legal 
reserve." This includes gold certificates, greenbacks, silver 
dollars and silver certificates. It will be lawful to have a 
reserve consisting wholly of silver and no gold. The Gov- 
ernment by law is prohibited from issuing paper currency 
based on silver, but this bill authorizes a corporation to do it. 
The law prevents the Government issuing more U. S. 
Treasury notes, or greenbacks, but this bill authorizes the 
corporation to issue three dollars of its paper currency for 
each dollar of Government greenbacks it holds to "secure" 
such currency, even if it has no actual gold. 

The Secretary of the Treasury reports as outstanding 
$1,809,296,685 of Government paper money. By gathering 



CORPORATE CURRENCY 91 

this all up and holding it as a "reserve" the corporation 
legally could issue and float $5427,890,055 of corporate cur« 
rwicy, more than five billions of dollars of wildcat paper 
currency, three times as much as the Government ever 
issued, and this without one single dollar of actual gold or 
even silver held by the Reserve Association to secure or 
insure the redemption of such currency in gold. The banks 
now hold $623,583,300 gold certificates, $194,474,846 silver 
certificates and $248,334,727 greenbacks, total $1,066,392,873. 
In one week this all could be turned over by the banks to 
their central corporation and immediately $3,199,178,619 
of corporate currency could be issued and loaned out to 
the people through the banks at say 6 per cent, a sum 
about equal to all the money of all kinds now in the 
United States, and all this without the corporation owning 
an ounce of gold or silver. 

This corporate currency, unlike bank note currency, is 
made available to be held by the banks as "legal cash re- 
serve/' If the corporation should gather up and hold as 
its "33J4 peJ* cent reserve" the $1,809,296,685 of outstand- 
ing Government pa^er money, and then print the $5427,- 
8^>055 of corporate currency based thereon and hand it 
over to its baniks to be by them held as their **legal cash 
reserve," the banks lawfully could inflate their loans of 
credit from 15 to more than 54 billions of dollars. And 
if, as they can under this bill, the banks convert half of 
their "demand deposits" into "time deposits" that will re- 
quire no reserves at all, the banks will be able to inflate their 
credit loans to i(^ billions of dollars. In? other words, 
without one cent of extra investment or a dollar of gold 
or silver security, the banks lawfully could swell their 
loans of "credit" from about 15 to over 108 billions of 
dollars put out at 6 f)er cent interest. This is seventeen 
times the total gold of all nations. It nearly equals the 
entire wealth of the United States. The figures stagger 
human comprehension. 

Never in all the history of government has there been 
such a criaizy, wide-operi, wild-cat scheme for currency and 
credit inflation as Congress now is solemnly asked to legal- 
ize under the guise of "elasticity" and turn over without 
reserve *afld beyond recall for fifty years to a private cor- 
poration that is required to haye but 100 million dollars 
cash capital, the po\v^er to be- exercised by just five men, 
a majority of the corporation's executive committee. Such 



92 UNITED STATES MONEY vs. 

inflation of bank credit would increase prices of stocks 
and property and decrease the relative purchasing power 
of wages I CO to 500 per cent. It would cheapen the 
dollar to about 30 cents, measured by its present purchasing 
power. 

Suppose the Federal Government was legally liable for 
every dollar of that five billions of corporate currency? 
The 100 or 200 million dollars of capital of the corpora- 
tion would not go far towards paying 5 billion dollars 
of depreciated corporation currency. 

To at least the extent of the Government currency held by 
the association to secure its corporate currency, the Govern- 
ment credit is used by the corporation. And by this plan 
$1,809,296,685 of good Government money can be taken 
away from the people. For all practicable purposes it is 
the same as destroyed, put permanently beyond the reach of 
the people. Every dollar of their legal-tender paper cur- 
rency thus can be taken away. In its place the people 
must accept the doubtful optional corporate paper currency, 
because they could get nothing else. The corporation never 
will let go of any of the Government currency because if it 
did it must call in and cancel two or three dollars of its 
corporate currency for each dollar of shrinkage in its 
reserve of Government money. Congress might better 
openly vote at once to call in and bum up the whole 
$1,809,296,685 of Government paper money. Then this 
money and the Government credit it represents could not 
be used as the legally authorized basis for five billions of 
wild-cat corporate currency. That would force the cor- 
poration to provide its own capital and actual gold to create 
a reserve to sustain its issues of corporate currency. This 
would limit somewhat the wild inflation and modify the 
intensity of the explosion when this Aldrich inflation bubble 
finally bursts. 

But is not the Government to be liable, legally bound for 
every dollar of corporate currency the Reserve Association, 
or the five men in control, may see fit to print? 

Have we not- at last discovered the "J^^er," the reason 
for the apparent mystery, the seeming reluctance of the 
sponsors of the Aldrich plan to answer writer's direct and 
oft-repeated question as to whether the Government in any 
way would be obligated? 

When writer was less than one year old, June 30, 1864, 
Congress, to help the banks float bank note currency and 



CORPORATE CURRENCY 93 

as a "war measure," added section 13 at the end of "an 
Act to provide ways and means for the support of the 
Government, and for other purposes." This law is in force 
today, and reads as follows : 

"Sec. 13. And be it further enacted, That the words 
'obligation or other security of the United States,' used 
in this Act, shall be held to include and mean all bonds, 
coupons, national currency, United States notes, Treasury 
notes, fractional notes, checks for money of authorized of- 
ficers of the United States, certificates of indebtedness, cer- 
tificates of deposit, stamps, and other representatives of 
value of whatever denomination, which have been or may 
be issued under any act of Congress." 

This was reenacted, and is now law, being Sec. 5413, 
as codified in Sec. 147 of the Penal Code of the United 
States, March 4, 1909 (35 Stat. L., 11 15), as follows: 

"The words 'obligation or other security of the United 
States' shall be held to mean all bonds, certificates of indebt- 
edness, national-bank currency, coupons. United States 
notes, Treasury notes, gold certificates, silver certificates, 
fractional notes, certificates of deposit, bills, checks, or 
drafts for money, drawn by or upon authorized officers of 
the United States, stamps and other representatives of 
value, of whatever denomination, which have been or may 
be issued under any act of Congress." 

In future years, after a billion or more corporate currency 
has been issued and badly depreciated, is it not certain that 
this 48-year-oId statute would be dug up and invoked by 
the banks as a moral and legal obligation on the Government 
to protect the people by maintaining at par such "national 
currency" and "representatives of value of whatever denom- 
ination which have been or may be issued under any act of 
Congress ?" 

Will not the National Reserve Association in law be a 
national bank and its currency "National bank currency"? 
Surely it is not a state bank. It will legally be a bank, be- 
cause the pending bill gives it the powers and functions of 
a bank. 

This corporate currency surely will not be "state currency'' 
issued by state banks under authority of state law. It will 
be "National currency" issued under authority of the Con- 
gress of the Nation. If this be true, the Government will 
be liable for every dollar issued. Even if it was not "Na- 
tional currencv," or "National bank currency," it would no 



94 UNITED STATES MONEY vs. 

doubt be held to be "other representatives of value" ♦ * * 
"which have been or may be issued under any act of 
Ccmgress." 

If this is a correct interpretation of that law, and it seems 
to be, it is a startling discovery. The law is printed in full 
in "Document No. 580, Laws of the United States Concern- 
ing Money, Banking and Loans, 1778-1909," issued by the 
Monetary Commission. 

Some if not all of the members of the Commission must 
have known of this law. Probably all of them did, for they 
have been receiving $7,500 per year for about three years, 
and presumably have read the documents and data they have 
prepared and issued. If they knew that this law obligated 
the Government for all currency issued by the Reserve 
Association and concealed the fact or even failed to make 
Congress and the people aware of that condition, they were 
false to their oaths of office and should be driven from 
public life in disgrace. 

It is significant, the fact that nowhere in the pending bill is 
there any provision expressly stating that the Government in 
no way shall be obligated or made liable by the acts of this 
private corporation. Why did not these sworn and paid 
public servants discuss this important matter in their report ? 
Why did they not include in their bill a provision that would 
protect the Government they pretend to be serving against a 
possible and probable liability of more than a billion dollars? 
Congressman Vreeland's letter shows that he thinks the 
Government might be liable. It is impossible to believe that 
a matter so important was not discussed by the entire com- 
mission, yet their report is silent on the subject, and their 
bill contains nothing to protect the Government and the 
people for fifty years against a possible liability that may 
amount even to five billion dollars, .and from which there 
will be no way of escape after Congress passes the pending 
Aldrich bill that then will be a contract, a "vested right." 
Was the Commission working for the Government, the 
People, or for the Banks and Wall Street? 

These conditions, if as here stated, tend to stamp the 
whole scheme as a colossal fraud on Congress and the 
people. The National City Bank and the National Bank of 
Commerce of New York and the Continental and Commer- 
cial National Bank of Chicago, should now explain their let- 
ters, printed in another chapter, wherein they say that in 
no way will the Government be obligated if the Aldrich 



CORPORATE CURRENCY 



AU 

TOinDTiiLnnc n/niomL nestDi/c msocit 

J ION TO COMER THC CI/ff/re/ICY AW CRIDI) 

OF we couHTirr. i pnonisec the(i you nouu 

INDOIfSE THEIIf P/IPER FOIf f BlUIOrt OOLUmi 

HEffE IS THE NOTE, JUST PUT YOUR flunB fiCPOi 

, THEBIKII." . ' „ 

//KieSAMi-Klison reuitEKB oio luck herve! 



96 UNITED STATES MONEY vs. 

plan becomes law. Mr. Reynolds of the latter bank^ a former 
president of the American Bankers' Association, and Mr. 
Vanderlip, president of the National City Bank, are said to 
be in the confidence of Aldrich and are alleged to have been 
most active in originating and promoting the Aldrich pri- 
vate central bank plan. 

It is also up to the Monetary Commission to explain ! 



CHAPTER V. 
INFLATION AND CONTRACTION. 

Cost of LMiiff mod Priem Go Up. Wkj? 

The chief purpose of government is to establish and main- 
tain conditions that will confer the highest good on the 
greatest number of its inhabitants. Every executive act, 
law of Congress and court decision should be witfi that end 
in view. With such conditions prevailing, the road to suc- 
cess will be open to every man and the general welfare con- 
served and advanced. "Life, liberty and the pursuit of 
happiness*' then will be easily attainable by everybody. But 
these priceless blessings are available in the highest degree 
only when all who desire can obtain steady employment at 
good wages and the products of labor and the farm find 
ready market at profitable prices. When everybody is pros- 
perous all are happy and contented. This tends to increase 
the stability and permanence of government. It causes 
civilization to advance and the human race to take a step 
nearer to its divine goal. 

Business prosperity, however, depends for its very exist- 
ence largely upon the supply of money and bank credit being 
always adequate in quantity and reasonable in price. By 
bank credit is meant bank loans. Ninety per cent of all busi- 
ness is done with bank credit and less than lo per cent with 
cash. Therefore the volume of general business very much 
depends upon the quantity of credit that the 24,392 banks 
can loan to borrowers. And the volume of this credit di- 
rectly and absolutely depends upon the amount of lawful 
money available for bank reserves ; the banks on the aver- 
age by law being allowed to loan about ten times as much 
"credit" as they have "lawful money" in their reserves. 

Therefore, the prime question, the very basic foundation 
on which rests all bank credit, business prosperity, individual 
happiness and the general welfare, is an adequate supply of 
sound government money. An excessive inflation of the 
volume of money breeds certain evils and an excessive con- 

97 



98 UNITED STATES MONEY vs. 

traction of the supply of money causes still greater evils. 
Increase of the quantity of money tends immediately to 
stimulate business activity and increase prices. It increases 
the. cash reserves of banks and puts each bank at work to 
find profitable chances to loan its resulting ten-fold increase 
of available bank credit. With more cash and credit among 
the people with which to buy, under the law of supply and 
demand prices must advance. As prices increase, profits mul- 
tiply and tend to stimulate production. This increases the de- 
mand for labor and in time will advance wages, under the 
same law of supply and demand, . But it is history that while 
the prices of commodities quickly advance with any material 
increase in the supply of money or bank credit, the wages of 
workmen respond slowly and usually only when the men com- 
bine u. -mions and demand increase. During the interim, be- 
fore wages are advanced, everybody on a fixed salary qr wage 
loses, because the fixed income will buy less at tjie. higher 
prices. Those with their wealth invested in securities bear- 
ing a. fixed income interest also lose because their fixed 
incomes will buy less property .and labor at the higher 
prices. But farmers, manufacturers and other producers are 
immediately and directly benefited by an increase in the 
quantity of money, because the resulting increase of prices 
gives them greater profit from the same oiitpuj of products. 
In fact, the general increase, in the purchasing power of 
the people due to increase in their supply of money and 
credit tends to improve the demand and consumption of 
products. This still further increases the profits of farm 
and factory. It also helps those in debt, because it takes 
less products at the higher price to pay a debt. 

For the same reasons, expansion of the currency operates 
to increase the prices of stocks and securities other than 
fixed — income notes, mortgages and bonds — ^and stimulates 
speculation. But it lowers the prices or value of invest- 
ments bearing a fixed rate of interest, such as bonds. 

Inflation, therefore, enhances the prices of things and 
cheapens the value of money. It also lowers the price of 
money and credit, the interest rate. It decreases the pur- 
chasing power, the value, of the dollar as measured in prop- 
erty or labor. If the quantity of money and bank credit was 
doubled without any increase in the amount of property or 
available labor the price o{ all property and labor practically 
would be doubled. It would take two dollars to buy the 
same amount of property and labor that could be obtained 



CORPORATE CURRENCY 99 

before for one dollar. It is the law of supply and demand, rela- 
tive quantities of Dollars versus Property and Labor, operat- 
ing. Doubling of prices is only another way of stating- that 
money, the dollar, has depreciated 50 per cent, measured in 
property and labor and judged by its purchasing power. 
There is and ever will be an eternal struggle between the 
great incorporated and individual interests that traffic in 
mone}'^ and bank credit for interest profits on the one side 
and the masses of the people who own the property and do 
the world's work on the other, over the value or purchasing 
power of the dollar measured in property and quantity of 
labor. The monied interests always naturally will seek to 
create conditions tending to keep down the prices of every- 
thing but the things they sell, money and bank credit, and 
to increase the price of money and credit, the interest rate. 
On the other hand, the producers will try to keep up the 
prices of property and labor and down the rate of interest 
paid for the use of money and bank credit. 

Those who own or represent large quantities of money 
or bank credit seeking investment at interest are on one 
side and the balance of the people are on the other. These 
two elements are not necessarily antagonistic, but their 
interests are diametrically opposed. One side always loses 
what the other gains. If the profit and power of one side 
by legislation or otherwise is increased, that of the other is 
correspondingly decreased. The people always pay the inter- 
est that money gets. Their profits diminish when interest 
rates advance and swell the profits of banks and money 
lenders. 

Much has been said about the increase in prices being 
due to the increase in the world's output of gold. Part of 
the advance of prices is due to elimination of competition by 
trust consolidations and other causes and part to increase in 
the quantity of gold. It is not increase in the ounces of 
metal as metal that raises prices but because gold is money 
and increase of the output of gold increases the quantity of 
money. Thie same increase in the quantity of paper money 
would produce the same effect on prices if such money was 
a full legal tender and had to be accepted by everybody. 
Any increase in the number of available deft-paying dollars 
always will tend to increase the prices of everything but 
money. That is the law of supply and demand. 

On the other hand any material decrease in the quantity 
of available money or bank credit tends immediately tojoyvpr 



100 UNITED STATES MONEY vs. 

the prices of property and labor. It lessens the demand. 
The people have less money with which to buy things or 
to deposit in banks. This soon reduces bank cash reserves 
and the banks immediately must call in and cancel credit 
loans equal to ten times such shrinkage of reserves. To pay 
these loans business borrowers must at once reduce expenses 
and sacrifice products and property. This increases the 
volume of commodities seeking immediate sale, with no in- 
crease in the demand. Under the law of supply and de- 
mand prices of such commodities must fall. In fact there 
is an actual decrease in the demand due to decrease in the 
purchasing power of the people, and this further depresses 
prices. 

In cutting expenses, salaried employees and wage work- 
men are laid oflF, which further reduces the buying ability of 
the public. These idle men and their wives and children g^et 
hungry. For this reason they quickly begin to bid for the 
jobs still held by those employed. Under the law of supply 
and demand for labor, this soon lowers the general wages 
of everybody. An idle tenth thus can reduce the wages of 
the employed nine-tenths. It is a fight for existence and 
they will not split hairs over the amount of the wages^ And 
as a rule employers pay no higher wages than they are 
actually compelled to grant. It is human nature, always 
will be, and the weak are at the mercy of the strong who 
have the money. A dollar can wait, can exist without food, 
but a man can not. Oh, what a constant and fearful strug- 
gle by the masses for every existence, millions of women 
and helpless little children, with nothing between them and 
actual starvation except the week's small wage 1 With prices 
increasing faster than wages, they must skimp and pinch 
and deny themselves pleasures and even many necessaries of 
life. 

On the other hand the excessively rich are getting richer, 
often through special legislative privileges improperly ob- 
tained. Incorporated wealth sometimes swells with arro- 
gance and impudently demands for itself greater profits and 
power at the expense of all the people. Which will the Gov- 
ernment serve, who will it protect ? 

O>ntraction of the currency, if excessive, is the deadly 
enemy of prosperity. It forces an immediate ten-fold con- 
traction of bank credit. This sudden and unexpected de- 
mand for payment of bank loans cramps and demoralizes 
business. If it follows an excessive inflation of the currency 



CORPORATE CURRENCY loi 

that has caused undue expansion of business and wild specu- 
lation it will wreck prices and values and bring disaster, 
panic and general ruin. It reduces the demand for farm 
and factory products by decreasing the people's buying 
power and thus lowers prices. The man in debt must work 
bnger and harder to produce more products with which to 
pay oflf his debt. Any serious reduction in the supply of 
money or credit or increase in the interest rate creates con- 
ditions that immediately begin to lower the general wages 
paid labor and lengthen the hours of work. It also demor- 
alizes the prices of all property and all securities, except 
bonds bearing a fixed interest rate, by reducing dividends. 
Mortgages and bonds bearing a fixed interest are increased 
in value by contracting the supply of money because the 
fixed income then will buy more property and labor at the 
bwer prices. The bulk of the vast bond or fixed income 
wealth of the world is owned by the banks and by other in- 
corporated and individual holders here and abroad. 

The banks of this country own bonds exceeding in value 
the total of all the money in circulation in the United States. 
This vast bond wealth would be greatly enhanced in value 
if contraction of the currency should make money scarce. 

The Aldrich plan would put the ownership, control and 
management of the National Reserve Association, with 
power to inflate and contract the quantity of money without 
limit, in the hands of the very private interests that would 
most profit by an abuse of that dangerous power. And every 
dollar gained by those interests through excessive inflation 
and contraction of the volume of currency would come out 
of the pockets of the people of the United States. 

Labor is immediately harmed by either excessive inflation 
or contraction of the quantity of money, or of bank credit 
used in business as a substitute for money. Excessive and 
rapid inflation robs labor by increasing the prices of products 
faster than the wages of men. Excessive and rapid contrac- 
tion of the supply of money or of bank credit also robs 
labor by demoralizing prices and business, destroying pros- 
perity, throwing many workmen into idleness and lowering 
the general scale of wages by decreasing the demand for 
labor. Wages go down faster than the prices of products 
on a falling market and go up slower than the prices of 
commodities on a rising market. For this reason the best 
thing for labor is general and steady prosperity and a con- 
stant and moderate quantity of currency and bank credit 



I02 UNITED STATES MONEY vs. 

always available at reasonable rates of interest, the volume 
to be elastic but regulated to increase and decrease with the 
volume of legitimate business and healthy activities of the 
country, but not with reckless speculation. 

When business is depressed, ill, a moderate currency in- 
flation will be a tonic, a stimulant to restore it to normal. 
When the country is afflicted with the fever of wild specula- 
tion, a carefully measured dose of currency and credit con- 
traction will reduce the fever and bring health to the busi- 
ness world. But it is a matter of absolute life and death 
that the financial doctor who prescribes and administers 
these two powerful remedies for those two diseases have 
the wisdom and skill always to give the right medicine in 
exactly the correct quantity for the particular disease then 
afflicting the country. The Chinese are said to pay their 
physician a regular sum while the patient is well and noth- 
ing while ill. This removes all temptation to keep the pa- 
tient in bed to increase the pay of the doctor. Instead of 
allowing the banks, that profit most when conditions are not 
normal, to act as our financial doctor and administer infla- 
tion and contraction, we should put this life and death 
power into the hands of those who will be disintrested 
or will profit most by stable conditions certain to confer 
upon all the blessings of general and steady prosperity. 

It is for the best interests of the country, legitimate busi- 
ness, and particularly of labor, that both extreme inflation 
and excessive contraction of the volume of money be 
avoided. The general welfare requires a steady, uniform 
and moderate supply of sound currency, the quantity rising 
and falling with the ebb and flow of the volume of ordinary 
business. 

There is no way by which this desirable elasticity, this 
increase and decrease, can be made automatic and natural, 
because money is not endowed with human intelligence. 

Human judgment must be depended upon to gauge from 
day to day the fluctuating volume of business and to measure 
and supply for the country the proper quantity of money. 
Also to stimulate business depression by increasing the 
volume of money and credit and lowering the discount or 
interest rate, and to put the brakes on excessive speculation 
when necessary by contracting the supply of available cur- 
rency and credit and by raising the discount rate. 

In Great Britain this imperial financial power is wielded 
by the Bank of England, and always wisely and patriotically. 



CORPORATE CURRENCY 



'noMir mBCBeeiTiciiKeoR PLmr-awcpom 
n ff/iKS/iNO BHE/IK PROS penny, to cmise 
ph/iics, hub to poutichuy hi/U the hipublic. 

-'eUSTJCITT " TO B£ SHK ftUS T B£ eHICISiO 

BY puBi/c /luTMOfiny, not by pa/ii/if£ 



I04 UNITED STATES MONEY vs. 

As the directors of that great institution are all merchants 
and business men and no banker is allowed to serve on the 
board, it shows that that very practical people realize that it 
is not wise to put such vast power in the hands of the banks 
that would greatly profit at the expense of the people by an 
abuse of such power. 

By excessive inflation of bank credit billions of dollars 
beyond safety and sound business principles the banks have 
put the country upon a false and fictitious basis with the 
range of prices high above true values. These prices must 
be lowered. It can be easily done by contracting the quan- 
tity of available money and bank credit. But to avoid this 
causing panic and general demoralization of business it 
must be done gradually and cautiously. And in justice to 
the people the price of money and bank credit, the rate of 
interest, must be reduced in proportion to the reduction of 
other prices. If Congress gives the banks through their 
Aldrich Central Bank this power to force readjustment and 
lowering of prices by contraction, we must expect that in- 
terest rates, the price of money and credit sold by banks, 
will be kept high and the price of securities, property and 
labor reduced. This will automatically increase the value 
of money and cheapen property and labor. This readjust- 
ment of prices must not be left to the banks that would 
profit most by an improper readjustment, and that by infla- 
tion have caused most of our present financial and indus- 
trial evils. 

By expanding and contracting the volume of the public 
currency and by raising and lowering the general discount 
or interest rate, those exercising such power could be a per- 
fect governor on the engine driving all American business 
and perfectly regulate it so that prosperity will be constant, 
steady, healthy and general. On the other hand with this 
same power they could wreck the machine, smash every- 
thing, destroy a nation's prosperity and happiness and in- 
augurate a financial atid industrial "reign of terror." 

The power is an arbitrary one. It must be so. It is auto- 
cratic. It is of supreme national importance, then, that this 
life and death power be exercised only and exclusively by 
disinterested and unselfish men of the highest skill, knowl- 
edge, courage, character and patriotism. 

Even then their exercise of this absolute and constant 
control over the very heart-beats of the business of 94,000,- 
000 Americans must be hedged about by every reasonable 



CORPORATE CURRENCY 105 

legal safeguard. Positively, there is no other practicable 
way to bring the 24,392 banks and their power of inflation 
and contraction under such effective and centralized control 
as will protect the country against the dangers of panic and 
the evils of excessively high and extremely low prices and 
insure the steady employment of labor at living wages. We 
never shall have a sound and genuine prosperity and be free 
from recurring periods of reckless speculation followed by 
panic depressions until the volume of money and the dis- 
count rate each day is raised or lowered to increase or check 
the volume 6i bank credit and of general business done with 
bank credit But it would be insanity, positive madness, for 
Congress to put this power to regulate all business into 
the hands of the very private interests that most need regu- 
lating. Instead of granting it to a private corporation 
own^ by the banks, it must be delegated to a great, deliber- 
ative public institution, a part of the Government of the 
United States. 

To create a dignified and deliberate body of men worthy 
of the entire confidence of the people, to whom safely could 
be entrusted a power more vast and potent in its daily effect 
on the business and activities of the whole country than the 
power exercised by Congress, the executive or the courts, 
is the reason for venturing in another chapter the sugges- 
tion for a United States Monetary Council. 

Cost of Living and Prices Go Up. 

From 1896 to 191 1 the quantity of money in the United 
States outside the treasury increased from $1,506,400,000 
to $3,214,000,000 or over 100 per cent. It increased from 
^1.44 in 1896 to $34.20 in 191 1 per capita. This shows an 
mflation in the quantity of money 60 per cent greater than 
the 33 per cent growth of population. The increase in prices 
of a large number of commodities and of the cost of living 
has been about 60 per cent. It must, therefore, be clear that 
inflation of the currency and the resulting' ten-fold inflation 
of bank credit are the chief causes for the rapid and large 
increase in prices and the cost of living. 

Coin, including bullion in the treasury (gold and silver), 
increased 1896 to 191 1 from $1,097,610,190 to $2^77,- 
837453, or about 144 per cent. As there has been no in- 
crease in the volume of Government greenbacks since 1896, 
Providence and the banks must be held responsible for the 
entire advance in the cost of living or increase of prices due 



io6 UNITED STATES MONEY vs. 

to inflation of the quantity of money. Providence increased 
the quantity of coin 144 per cent^ while the banks inflated 
bank currency over 300 per cent. Providence did not do it 
for personal profit, but the banks did. 

Gold certificates based on 100 per cent of gold held in the 
Treasury have increased from $154,048,552 in. 1896 to $930,- 
367,929 in 1911. Of this total the banks on June 7, 1911, 
held $623,583,300 or nearly two-thirds, and such certificates 
were legal basis on which the banks could loan over six 
billion dollars of bank credit. The U. S. gold certificates 
held by National Banks alone increased 1896 to 191 1 from 
$20,336400 to $300,201,210, enabling such banks to inflate 
their loans of credit based on gold certificates in their re- 
serves from $200,000,000 to $3,000,000,000. 

Attention to the following facts will enable us to locate 
and definitely fix the chief responsibility for the rapid in- 
crease in prices and the cost of living without hunting in 
distant lands or holding an international conference. For- 
eign delegates to such a conference would be certain to send 
us back home with the admonition that the best way to stop 
increasing the cost of living and prices throughout the 
whole world is to stop the wild and dangerous inflation of 
credit that in recent years has been practiced by the banks 
of the United States. 

And above all that Congress should not by passing the 
Aldrich Central Bank bill enable the banks to still further 
dangerously inflate the currency, credit, prices and the cost 
of living, practically without Kmit or restraint. 

The statement that increase and decrease of the volume of 
bank credit or loans has the same effect on prices that is 
caused by increasing and decreasing the quantity of money 
is a sound economic principle. In fact the effect is more 
marked and sudden. When a bank discounts a $10,000 note 
it simply loans or grants its customer the right to draw 
checks on the bank for that sum. That is a loan of bank 
credit, not cash. The customer gets no money and desires 
none. But he can buy $10,000 worth of goods and pay for 
same with bank credit by drawing checks, the same as if 
he had $10,000 cash. For this reason inflation of bank 
credit has exactly the same effect as an equal) inflation of 
gold or other money. It increases the demand for things 
and raises prices. And contraction produces the opposite 
effect. 

Bank resources practically are all available one way or 



CORPORATE CURRENCY 107 

another for use by the people. The banks may discount 
paper, loan on mortgage or buy bonds and other securities, 
their profits being the interest received. All these uses of 
bank resources tend to increase the buying power of the 
people, thus improving the demand for property and labor 
and enhancing prices. More than three-fourths of all bank 
resources are mere loans of bank credit that cost the bank 
nothing to supply, like a man charging 6 per cent for in- . 
dorsing the note of another responsible person. But it 
enables bank customers to go on doing business, buying and 
paying for goods and labor, the same as if they had actual 
money. Bank credit is a substitute for money in 90 per cent 
of all transactions. One hundred sixty billion dollars of 
business was done last year by check and without use of a 
dollar of money, while the total business done with actual 
cash totaled but a few billion dollars. 

The entire gold production of the United States since 
1896 was less than $1,300,000,000, a little more than $1,000,- 
000,000. But the actual increase of bank resources since 
1896 is the enormous sum of $16,077,200,000, or over 
$16,000,000,000. This inflation of bank credit during the 
past fifteen years is two and one-half times more than the 
$6,604,100,000 that comprises all the gold held by the forty- 
six countries of the world. It exceeds by $3,000,000,000 
the $12,936,397,600 that comprises the total of all the gold 
mined in the whole world since Columbus discovered 
America in 1492, and greatly exceeds the $12,331,200,000 
(gold $6,604,100,000, silver $2,599,500,000, paper currency 
$3,127,600,000) that constitutes the entire present money 
supply of the whole forty-six nations of the earth. 

While the quantity of gold has more than doubled, the 
present total gold stock of all countries is less than 7 bil- 
lions. Should an increase of less than 4 billion dollars in 
the monetary gold of the whole world be held responsible 
for the world-wide increase of prices ? Should not the in- 
crease of over 16 billion dollars in the volume of available 
bank credit in the United States, and the increase of bank 
credit in all other countries be taken into account in appor- 
tioning the responsibility for the vast increase in prices and 
the cost of living? 

A considerable portion of the monetary gold is hoarded in 
the reserves of governments and does not materially eflFect 
prices, because it is not available for use as money by the 
people. But every dollar of outstanding bank credit is doing 



io8 UNITED STATES MONEY vs. 

business and therefore has a direct effect upon the prices of 
all property and labor. Whatever advance in prices and the 
cost of living is due to increase in the quantity of gold, 
money and credit, a fair estimate would seem to be about lo 
per cent due to increase in the world's output of gold and 90 
per cent to the inflation of the world's volume of bank 
credit. 

According to the table on page 804 of U. S. Comptroller's 
,1911 report, bank currency increased 1896 to 191 1, $199,- 
200,000 to $681,700,000, or 342 per cent; bank credit loans, 
$4,251,100,000 to $13,046,400,000, or 307 per cent; while 
during the same period the population of the United States 
increased only 33 per cent. During that time the number 
of banks increased from 9469 to 24,392, their capital $1,051,- 
900,000 to $1,952,400,000, surplus and undivided profits 
$694,400,000 to $2,065,000,000, total resources $7,553,900,- 
000 to $23,631,100,000, individual deposits (largely the pro- 
ceeds of discounted notes) $4,945,100,000 to $15,96(5,300,000, 
and cash in bank $531,800,000 to $1,554,200,000, and amount 
due from banks to other banks $645,000,000 to $2,788,- 
800,000. 

While the total population of the country increased 1896 
to 191 1 from 70,254,000 to 93,983,000, or 33 per cent, and 
the total money in circulation from $1,506434,966 to $3,214,- 
002,596, or 113 per cent, the volume of bank credit in the 
form of bank loans and discounts increased from $4,251,- 
100,000 to $13,046400,000, or 307 per cent. The astonish- 
ing inflation of bank credit has gone on nearly ten times as 
fast as the growth of population. We should stop blaming 
Providence for increasing the gold output 100 per cent and 
put a brake on the banks that have dangerously inflated 
credit more than 300 per cent. Keeping in mind that in- 
crease in the volume of bank credit (bank loans to indi- 
viduals and corporations) increases the purchasing power of 
the people the same as an increase in the volume of money, 
thereby increasing the demand for commodities, securities 
and other property, causing an advance of prices and stimu- 
lating speculation, have we not discovered in the tremen- 
dous inflation of bank credit the true cause of most of the 
advance in prices and increase in the cost of living? If so, 
then the banks, in order vastly to increase their already 
swollen profits by increasing their loans of credit an amount 
aggregating nearly three times the total of all money in cir- 
culation have deranged all the conditions of American life 




III 

|i 



I 



no UNITED STATES MONEY vs. 

and business, nearly doubled the cost of living for every 
family, inflated listed securities above value countless mil- 
lions and made possible the wild speculation and trust con- 
solidations since 1896 that have staggered the imagination 
of the entire world and thrust American finance and in- 
dustry helplessly into the crater of a seething speculative 
volcano that perpetually endangers the country with the 
menace of frequent and desolating panics. 

This dangerous condition has come upon us because un- 
like England we have left the regulation of all currency 
and finance to Wall Street and the banks. Congress at the 
instance of the financiers has passed laws that tend to con- 
centrate financial power and profits in the hands of the very 
interests that profit most from exploitation of the people 
by abuse of such power. If the country is kept always on 
the edge of dangerous and devastating panic it is due to the 
inordinate greed that has induced the big banks and Wall 
Street to cause a vast and reckless inflation of the volume of 
bank credit billions of dollars beyond the needs of sound 
legitimate business and chiefly to artificially inflate the quo- 
tation prices far above value of the nearly thirty billion 
dollars of listed securities, a large portion of which repre- 
sent no actual assets, but are sustained at fictitious prices 
with bank credit loaned in enormous volume at nominal 
rates to inside favored operators. 

Notwithstanding this bank record, the Aldrich bill would 
shackle the hands of the people and their government for 
fifty years and unreservedly grant to a private corporation 
owned by these same banks absolute power still further to 
inflate the currency, bank credit, prices and the cost of 
living untold billiops without any eflFective restrictions or 
restraint, thereby robbing the producers by further ad-; 
vance of prices while keeping wages down and by higher 
interest rates made possible by the monopoly of the supply 
of money and credit the National Reserve Association is 
designed to create. 

If that private central bank, the National Reserve Asso- 
ciation, becomes a fact, the machinery for an endless chain 
inflation of currency and bank credit will be complete. The 
banks have discounted about 15 billion dollars of commer- 
cial paper or notes based on i>^ billions of cash in their 
reserves. Under the Aldrich plan the banks would redis- 
count with the central bs-nk, say one-tenth, or ij4 billions, 
of their 15 billions of commercial paper, getting therefor 



CORPORATE CURRENCY in 

ij4 billions of the association's corporate currency. This 
currency when deposited in the bank reserves will enable 
the banks to double their credit loans, inflating same from 
IS to 30 billion dollars. Then they could take a tenth of 
the 15 billions of new commercial paper and rediscount same 
for association currency, increasing "cash reserves" to 4>4 
billions and credit loans to 45 billions. And so on over and 
over without any effective restriction or limit. Every billion 
of commercial paper rediscounted for corporate currency or 
for a "credit balance" at the National Reserve Association 
increases the possible loaning power and profits of the 
banks ten fold. It puts a premium on wild inflation and 
reckless banking. It may further increase prices and the 
cost of living beyond all human experience. 

If Congress yields and authorizes a private central bank 
as proposed by the pending bill, the end when the bubble 
bursts will be universal ruin and national bankruptcy* 



CHAPTER VI. 
FRENZIED FINANCING. 

A Corpormtion With a BilBon of Good Astoto to be Formed Without 
die InTostment of a Dollar. Greatest Feat of Financial 
Legerdemain in All History. The Mystic Power Explained. 

If Congress passes the pending Aldrich private central 
bank bill, the financing will be accomplished substantially 
as follows: 

The three parties interested — ^the Government, the Na- 
tional Reserve Association and the banks — sit around a 
table prepared to close the deal. 

The Government delivers to the association (Sec. i) its 
fifty-year charter — ^the Aldrich law. The banks hand to the 
association a $100,000,000 check drawn on themselves to 
"pay in" 50 per cent of their $200,000,000 subscription 
(Sees. I and 2) to association stock. The association being 
now ready to "do business," the Government "deposits" 
with the association (Sec. 23) its "general fund," its entire 
treasury balance, say $150,000,000. To facilitate matters, 
$1,030,000,000 (Sec. 51) National Reserve Association 
"currency" has been printed in advance. This now is 
handed over to the banks by the association for $744,000,000 
U. S. 2 per cent bonds (Sec. 49), $186,000,000 of "gold 
or other lawful money" to put into the association's reserves 
(Sees. 41 and 42), and $100,000,000 as a "loan" to enable 
the banks to meet their $100,000,000 check given to "pay 
in" 50 per cent of their subscription to $200,000,000 associa- 
tion stock. The association then hands to the banks their 
$100,000,000 check and takes back $100,000,000 of corporate 
currency to pay same. 

This completes the deal. The association now owns $744,- 
000,000 U. S. bonds, a cash reserve of $336,000,000 of 
"gold or other United States money" (being the Govern- 
ment $150,000,000 and $186,000,000 obtained from the 
banks in exchange for corporate currency), and the promis- 

112 



CORPORATE CURRENCY 113 

sory note of the banks for $100,000,000, and $100,000,000 
of its corporate currency, total resources $1,280,000,000. 

It has as debts, or liabilities, paid in capital stock, $100,- 
000,000; Government deposits $150,000,000; corporate cur- 
rency $1,030,000,000; total $1,280,000,000. 

The association at once exchanges (Sec. 55) the $744,- 
000,000 of U. S. 2 per cent bonds for 3 per cent bonds run- 
ning fifty years. It pays (Sec. 56) thereon ij^ per cent 
tax, I per cent representing the difference between 2 per cent 
and 3 per cent interest and the other >^ per cent being the 
same as now is paid (U. S. Act of May 30, 1908) on the 
$744,000,000 of outstanding bank note currency to be can- 
celled and replaced by corporate currency. Government gets 
and association pays nothing extra. But the Government 
loses the i per cent banks now must pay (law of May 30, 
1908) for Government deposits and the association gets 
the benefit. The association also gets the 3 per cent in- 
terest on $744,000,000 bonds, less the ij^ per cent tax, 
or I J^ per cent net, a total net profit of $1 1,160,000 annually. 
This is enough to pay to the banks yearly 5 per cent divi- 
dends (Sec. 19) on the amount paid in on their associa- 
tion stock and to carry $6,160,000 to surplus annually, thus 
increasing the "book value" (Sec. 12) of association stock, 
for the benefit of the banks. Although the association has 
not from any source really received and retained one dol- 
lar of actual money, other than the Government's $150,- 
000,000 deposit, except the currency it has run off on its 
own printing press, yet already it has a permanent annual 
net income of more than 11 per cent on its entire $100,- 
000,000 of "paid in" capital stock. The banks, of course, 
get the benefit because (Sec. 3) they own all of the asso- 
ciation's stock. 

The $336,000,000 is (Sec. 41) a 50 per cent "reserve" 
covering ^72,000,000 of the $1,030,000,000 issued corporate 
currency; the other $372,000,000 of association currency 
used to pay for half of the $744,000,000 of bonds (Sec. 42) 
requires no reserve behind it. By paying a special tax (Sec. 
41) the association can issue $336,000,000 more corporate 
currency on this same $336,000,000 of reserve, thus re- 
ducing the reserve basis from 50 per cent to 33^^ per cent 
of the volume of corporate currency. And the law per- 
mits the association (Sees. 41 and 51) to issue corporate 
currency without limit as to quantity. 

The Aldrich bill authorizes the central bank to issue at 



114 UNITED STATES MONEY vs. 

least two dollars of corporate currency against every dollar 
of Government money held in its reserves. With just one 
dollar and no more to start with, the association could cor- 
ner and take out of circulation the entire three billion dol- 
lars of Government money and put into circulation six bil- 
lions of corporate currency and never use any capital in 
accomplishing the deal except the original one dollar and 
the currency produced on its own printing press. As an 
"endless chain," it could buy one and issue two over and 
over until it has every dollar of U. S. money locked up in 
the vaults permanently. 

The $100,000,000 of its corporate currency handed back 
to take up the $100,000,000 check given by the banks to 
"pay in" 50 per cent on the $200,000,000 association stock, 
can be kept by the association in its "central reservoir" 
to protect the banks against "runs," to "extinguish a finan- 
cial conflagration in any part of the country," and to 
(Sees. 26y 27 and 28) rediscount for the baidcs. If the 
association needs more currency for these purposes, it can 
get it in any quantity in an hour's time any day practically 
without expense simply by starting its currency printing 
press going. It all will be money because (Sec. 53) the 
Aldrich bill makes it so. This plan makes it unnecessary 
for the banks to withdraw from Wall Street, and put into 
its "central reservoir" any of their (Sec. 39) ordinary legal 
reserves that now draw profitable interest steadily, being 
used by high finance in its {^)eculative ventures. 

It is seen that the association has emerged prosperous 
from the deal and that the Government has gained nothing, 
but it has lost the i per cent interest now paid by the 
banks for the use of Government deposits. How have the 
banks fared by the transaction? 

The banks formerly got from the people 6 per cent for 
use of $744,000,000 of bank-note currency and the 2 per 
cent interest on the bonds securing same, less J4 per cent 
Government tax, or lyi per cent ($11,160,000) annually 
over and above 6 per cent on their investment. The teiric- 
note currency being now cancelled, this income is cut off. 
But they get precisely the same profit through tJieir owner- 
ship of association stock, being the 3 per cent interest paid 
to the association by the Government as interest on the 
$744,000,000 of new fifty-year 3 per cent bonds, less ij4 
per cent tax, or $11,160,000 net profit annually. So the 
banks lost nothitig by parting with the bonds and the bank- 



CORPORATE CURRENCY 115 

note currency privitege. And through their association they 
get the use of the Gove^nihenfs $150,000,000 without (Sec. 
25) paying the j per cent interest formerly required by, law. 
Theoretically, the banks put $100,000,000 into association 
stock, and $186,000,000 into the association's reserves. 
Practically, they did not put up one cent ; for before the ink 
was dry the banks without cost obtained from their associa- 
tion enough corporate currency usable as money, to replace 
the $100,000,000 and the $186,000,000, besides the $744,- 
000,000 of currency given them to pay for the bonds they 
sold. And it should be remembered that whatever the asso- 
ciation owns belongs to the banks, for they own all the asso- 
ciation's stock. Neither the bonds or the $744,000,000 of 
bank-note currency was usable by the banks as "lawful, 
cash reserve*' (See National Bank Act) on which. to make 
credit loans* The banks only could get 6 per cent for use 
of the bank-note currency and 2 per cent interest on the 
bonds. But this new corporate currency by the Aldrich 
law (Sec. 39) is made usable by the banks as "legal cash 
reserve*," against which the banks lawfully may loan about 
ten times the total of such reserves in the shape of credit, 
ordinary bank loans to business borrowers. Deducting the 
$100,000,000 used to replace the amovtnt "paid in" for asso- 
ciation stock and $186,000,000 to offset the lawful money 
supplied for the association's reserves, the banks still have 
left $744,000,000 of the $1,030,000,000 corporate currency. 
This put into the bank reserves increases the loaning power 
of the banks $7,440,000,000, an inflation about equal to half 
the $15,000,000,000 that comprises the present total credit 
loans of the 24,392 banks of the United States. When this- 
increase of loans is accomplished at 6 per cent the bank will 
receive an extra yearly net profit of $446,000,000, or suffi- 
cient to pay over 20 per cent extra annual dividends on the 
$2,000,000,000 capital stock of all the banks of the country. 
That is the rich prize for which the big banks are strenu- 
ously striving. And it should be borne in mind that every 
dollar of profit made by the association and the banks comes 
out of the pockets of the people of the United States. 

In passing the Aldrich bill Congress makes possible this 
bewildering and amazing financial transaction in every de- 
tail precisely as above stated. The National Reserve Asso- 
ciation thus literally lifts itself financially over a billion- 
vdollar fence by its own boot straps — its own paper currency 
^by grace of the law of .Congress. 



UNITED STATES MONEY i 



NaT ION Al RESERVE aSSOC/flTION'S 
PRiy/ITE PRINTING PRESS 




Without investing a dollar the confederated banks will 
completely finance and exclusively own a private corpora- 
tion that will have a billion of assets and a billion of cor- 
porate currency made money by the law and increase the 
loaning power of the banks over seven billion dollars, and 
their possible annual profits nearly a half billion. This all 
can be accomplished almost immediately, when the Aldrich 
bill becomes law. And that is only the first round. It repre- 
sents but a small portion of the overwhelming power and 



CORPORATE CURRENCY 117 

possible profits to be conferred by act of Congress upon 
Wall Street and the banks through their association — ^the 
coming great Central Money Trust. The people of the 
United States get not the slightest benefit. And yet it is 
the law of their Congress, conferring the quality of money 
upon the paper emissions of a mere private corporation for 
the exclusive profit of such corporation and its beneficiary 
banks, that is the magic power which in one minute makes 
$1,000,000,000 of actual value out of nothing, without the 
investment of a single dollar or one hour's human labor. 
This actual accomplishment will excel in daring and magni- 
tude the wild dream of the ages by which the alchemists 
have sought to convert the baser metals of the world into 
gold. 



CHAPTER VIL 
CONFESSIONS OF WALL STREET. 

Letters From Banks ami Fiasncieri. Political Conspiracy? 

Documentary Proof. 

The Central Bank plan was originated by Wall Street 
and now is being actively promoted by the big banks and 
financiers of that center of high finance. Of that pregnant 
fact there is not the slightest doubt. Overwhelming evi- 
dence of the most convincing character is given in this 
volume. 

The people have a right to know the truth before their 
Congress acts. They are entitled to information disclosing 
just who started the movement, what interests are promot- 
ing or financing it, the benefits such interests expect to de- 
rive therefrom and the eflFect its success will have upon the 
country and the welfare of its inhabitants. With that object 
in view, the writer recently wrote over his own signature 
letters similar to the one hereinafter given in full addressed 
to many of the biggest banks, trust companies, insurance 
companies and financiers of Wall Street. While those reply- 
ing doubtless did not realize the purpose of the inquiry or 
expect publication of their replies, there should be no legiti- 
mate objection to their publicity. No deception was em- 
ployed. The inquiries were pertinent to a public question of 
great general interest. The letters were from and the re- 
plies to a perfect stranger. The correspondence is written 
confession, evidence of the highest order, officially and con- 
clusively showing for the information and enlightenment 
of the people of the United States the important fact that 
the most prominent and powerful banks and financiers of 
Wall Street favor and zealously are helping to promote the 
"Aldrich plan" for a privately owned central bank, named 
National Reserve Association, to monopolize the entire pub- 
lic currency of the republic. 

The writer here publicly acknowledges his appreciation 

118 



CORPORATE CURRENCY 119 

for the courtesy of such replies, and makes no charges or 
deductions against those writing them, but leaves the lan- 
guage of each letter to speak for itself. In making the let- 
ters public, he believes he is violating no confidence, as none 
were marked confidential, but is performing a high duty and 
he hopes also rendering at least a slight public service. 



National City Bank. 

The National City Bank is the most prominent financial 
institution in Wall Street. It is the largest bank in the 
United States. Often it is called the "Standard Oil" insti- 
tution. But now it is said that the several supremely potent 
financial interests or "groups" of Wall Street that once 
warred on each other, but now are alleged to "co-operate" 
in feasting off the public, all are directly or indirectly inter- 
ested in the affairs or doings of this one great bank, the 
banking colossus of America. Its capital is $25,000,000, its 
surplus and undivided profits $27475,000, total $52475,000; 
which vast sum is nearly equal to the combined capital and 
surplus of one-third of the total 7,331 National Banks of 
the United States, taking the smaller banks. This bank also 
has individual deposits $182,709,000, deposits by banks $67,- 
908,000, by U. S. Government $658,000, and other liabilities 
$6,141,000, total $311,930,000. It has resources: loans and 
discounts $137,954,000, U. S. bonds $9,907,000, state and 
municipal bonds $42,091,000, circulating notes, or bank note 
currency, $4,009,000, due from banks $11,874,000, cash and 
exchange $104,803,000, other resources $8,300,000. Its 
directors are : 



J. P. Morgan, Jr. P. A. Valentine. 

Henry C. Frick. Joseph P. Grace. 

George W. Perkins. H. A. C Taylor. 

J. Ogden Armour. W. D. Sloane. 

C. H. McCormick. Wm. Rockefeller. 

Moses Taylor. F. M. Bacon. 

Frank A. VanderHp. S. S. Palmer. 

C. H. Dodge. Edwin S. Marston. 

^acob H. Schiff . G. H. Milliken. 

ames Stillman James A. Stillman. 

Sanxuel Sloan. James H. Post. 
John W. Sterling. 



CORPORATE CURRENCY 121 

While this often is called the Standard Oil bank, it will 
be seen that the two great alleged Wall Street parties, Mor- 
gan and Standard Oil are merged in the control of this im- 
perial bank. The steel, beef, harvester and other great 
trusts and railroads, and vast foreign capital all are repre- 
sented on its board. The First National Bank with $10,- 
000,000 capital, $21,189,000 surplus, $160,090,000 resources, 
and the National Bank of Commerce with $25,000,000 capi- 
^1> $15,532,000 surplus, and $207,130,000 resources, are 
companion financial giants largely controlled by the same 
interests, as also is the Continental and Commercial Na- 
tional Bank of Chicago, that has $20,000,000 capital, $10,- 
285,000 surplus and over $200,000,000 resources. The com- 
bined resources of these four great banks is $1,000,000,000, 
and indirectly they control many billions and dominate many 
banks in New York and elsewhere throughout the United 
States. 

The recent organization of the "National City Company" 
with $10,000,000 capital, said to be owned or controlled by 
the National City Bank or its stockholders, was reported to 
have been largely accomplished out of the excess profits 
by an extra $10,000,000 cash dividend made by the bank 
for the purpose of holding or dealing in stock market and 
other securities and things thought to be unlawful for a 
National Bank to own. 

The public press has said substantially that this "side 
partner" corporation already had acquired interest in the 
capital stock of nearly a hundred other banks in various 
parts of the United States, but that lately it has sold or 
parted with actual possession of such bank stocks. Whether 
its accumulation of stock in other banks was with the pur- 
pose of ultimately controlling or increasing its influence in 
the proposed National Reserve Association, the stock of 
which under the "Aldrich plan" would be exclusively owned 
by the banks, not pro rata but in proportion to size of capital 
of each bank, and thereby to obtain a larger hold upon the 
entire public currency and all the revenues of the Govern- 
ment to be turned over to such central bank under the 
"Aldrich plan," only those "on the inside" can tell. 

Whether the subsequent reported shifting of the owner- 
ship or possession of such bank stocks was due to official 
objection or to fear that the regretted publicity of the fact 
of their acquisition might alarm and prejudice the public 
into fearing that Wall Street already was getting ready 



122 UNITED STATES MONEY vs. 

quickly to seize control of the Central Bank and the entire 
public currency and the public revenues to use the same for 
its purposes, thereby perhaps endangering the passage of 
the scheme by Congress, the writer does not care to say. 

Was this bank or its **side partner" corporation to be the 
holding company for the stock of enough banks to control 
the National Reserve Association, so that in effect it would 
have as much power and control over the public currency 
as though Congress by law made the National City Bank 
direct the great Private Central Bank of the country ? 

This bank or its principal oflftcers for years have been 
ardent and consistent advocates of the central bank plan 
in public addresses, circulars, letters and literature circu- 
lated at large expense. Its president, Frank A. Vanderlip, 
has been particularly prominent, intelligent and active in 
the movement. The writer does not criticise or question 
their right to do this. Doubtless a central bank would 
greatly add to the profit and power of this bank, therefore 
it would be only natural that they strain every nerve and 
sinew to bring about the passage of the act by Congress. 
But writer believes that the people, whose servant Con- 
gress is, should know the facts. This done, the people must 
judge for themselves whether they want for their patriotic 
weQare just what Wall Street wants for its selfish interests. 

The following letters and replies explain themselves : 

'Tlankinton House, European Plan. 
H. Stanley Green, Manager. 
Milwaukee, Wis., November 20, 191 !• 

National City Bank, New York City. 

Gentlemen: Kindly send to me here any printed infor- 
mation issued by you on the Aldrich monetary plan. 

Do you understand that a bank gets 4 per cent dividends 
only on that part of its subscription called in in cash or on 
the face of its subscription to National Reserve Association 
stock ? 

Will the credit of the Government be pledged to make it 
certain that the currency of the said association always will 
be maintained at par? a 

What are the pro$pects for early favorable action by 
Congress ? 

Thanking you, I am, very tn^ly yours, 

(Signed) Alfilsd O. Crozier." 



CORPORATE CURRENCY 123 

"The National City Bank of New York. 

Capital $25,000,000, Surplus and Undivided Profits $25,000,- 

000. Cable Address 'Citibank.' 

New York, November 24, 191 1. 

Mr. Alfred O. Crozier, Plankinton House, Milwaukee, Wis. 

Dear Sir : Replying to your favor of November 20th, we 
beg to send you herewith a copy of the revised plan of 
Senator Aldrich for monetary legislation, in which you will 
find the complete details of Senator Aldrich's ideas. Under 
separate cover we are also sending you a copy of an address 
made by our president, Mr. Vanderlip, before the Com- 
mercial Club of Chicago on the Aldrich plan as originally 
submitted, and we also send you a copy of addresses made 
by Mr. Vanderlip this past summer before the Chautauqua 
Association on Modern Banking, in which you will find 
material covering the general idea. 

In paragraph No. 4 of the plan enclosed herewith, you 
will find a statement of the proposed distribution of earn- 
ings. From this you will note that after the payment o-f all 
expenses and taxes the stockholders shall receive 4 per cent. 
There is no definite statement as to just what principal this 
4 per cent is to be paid on, but our natural assumption is 
that it would be paid on the amount of cash actually paid in. 
We do not understand that it is contemplated that dividends 
will be paid on anything but actual cash subscriptions. 

In paragraph 71 of the plan, you will note that it is pro- 
vided that the notes of the National Reserve Association 
shall be received at par in payment of all taxes, excises and 
other dues to the United States, and for all salaries and 
other debts and demands owing by the United States to 
individuals, corporations, or associations, except obligations 
of the Government which are by their terms specifically pay- 
able in gold, and for all debts due from or by one bank to 
another, and for all obligations due to a bank. It will be 
seen from this paragraph that the notes of the Reserve As- 
sociation are to be legal tender. As to any specific pledge 
of the credit of the Government to make it certain that the 
currency of the association always will be maintained at par, 
however, we do not understand that such a pledge is con- 
templated. 

It is quite impossible for us to predict what may be done 
along the lines of favorable action by Congress at an eairly 
date. Our only guide to this possibility is the fact that 



124 UNITED STATES MONEY vs. 



^^^A<uu^^taluci^SSAX^n^ 



xy.C^^:»^ 







Voveober 24th, 19U* 



Mr. AlfMd 0« Croti«r« 
rUMcimtoB 1toM«» 

UllirandEM* Vi«O0MU« 

Omt Sin 

B«3yli« to your faror of iroT«*«r 20tb-« «• bog t« tfod 700 lMr*» 
with a 0017 of th« ItOTlMd ?laa of Sonator Aldrlob for lSon«tai7 toclalatiou* 
la vblOh you will flad tho ecqploto, dttalla of Staator AlOrioh** idoas. Tte- 
der ioparato corer, wt are also MndiBg you a oopgr of aa iddroaa wde ^ our 
Pr«aidftBt« va* Taadorllp* beforo tho Coa&orolal Clu!^ of Ohloaco oa tho 11- 
drioh Plaa aa origlaally autaBittod* and «• alao aoad you a oou of iddresiot 
Mde tj Kr. Tanderllp thia past sunner before tbe Ctaataaqoa lasoolatioa oa 
UOdera Baakiae, la which you will -find naterial ooreriag the c*a*ral idea. 

Xa Paragraph TTo* 4 of the Plaa eaolosed herewith* joa will f iad 
a etateaeat of the proposed distributioa of earaiags. fro« this you will 
aote that after the payneat of all expeaaea and taxes the stoOl^lders Aall 
reoeive 4 per oeat. There is ao deflaite stateoeat as to Just what prin- 
cipal this 4 per ceat is to be paid on* but our aatural aasaqptioa la that 
it wo9ld be paid oa the aoeuat of cash actually paid ia* We do aot aadeiw- 
stead that it is ooateq^lated that dirideads will bt pail on aggrthta^ bat 
aotoal oaA snbsoriptioas. 

la Paraeraph 71 of the Plaa, you will aote that i^ is prowided 
that the notes of the Vattoaal Reserre Assooiatioa tfiall be reoeired at for 
ia payasat of all taxest exoisest and other does to the Qhited 8tatea» aad. 
for all salaries and other debte aad deasada owias by the (teited 9tate# to 
ladlTiduals* oorporatioas* or assooiatioaa» exeept obligatioaa of the iniim 
■sat wbieh are ty their terns spaoifioally payable ia eold* aad for all dub^ 
due froa or by oae baak to aaother, aad for all oblieatioaa doe to a ~ 



Xt will be seea froA this paracrqib that the aotes of the Beotrvt 
AaeoeUtiOtt are to be legal teoder* Aa to any speoifie pledge tff tha credit 
Of the O o ie iua e a t to wfta it oertaia that tha oarreapgr of thSL Aseooiatloa al« 
w^a will be ■sioUlaed at par» hoetrtr* wt do aot vaderttaod that foioli a 
pledfe it eaaHijIated* 

It is viftte iBVooaible for aa to predict atet Mr W doat aloag ^ 
liaoa of forovable oetioa ty Ceogreas at aa early .date. Oar ooliy gai^a ta IhU 
I^eiiiMUty la the foat that there ia at preeeat a widaepreed aefieai to Up 
tilbe early aotioa alai« this liaa. Toa will aadoObtedly hare aotieod froi 
the pOblte pvtoa tKat there hawa beea orgsalsed la Torloos stotet braaoliee of 



CORPORATE CURRENCY 125 



Xr, Unrtd 0. T^si«r.«.^%»r«%««<«^ Itovofttr atth» 1921* 



m orsndsatloB entitled - Tb« Ifttional Cltlstas &••#»*# ^or the dittodaatioi 
ef lafoxvatlon regiardlac oar enrreiiagf aaA 'hiflrliig protleae» and it le to be 
tsnced tbat the ohjeet of the league is to eteeate the people to uaderetaaA 
the prohleas, aod to eoaprdieBA also the aeeessity for proopt aetioa hy Coo- 
erets. Toa will also hare noted that praotleally the entire session of the 
iaeriosB Bsnicers Assoeiation nov in conTsatiea at Kev Orlesns has been de- 
voted to eonsideratiOB of Senator Aldrloh*s Han. It is quite likely that 
the faivorsble attitude of the a ss fc e rs of the Association will have consider- 
«ble Twicht -with OoBeress« fheee tvo elreuBstaaeee would seem to indicate that 
a good deal of pressure will be broo^t nipen Congress to pass this le^sla- 
tlon at an early date. Vhether or not sndh pressure will be effeetive is» 
of eonrse» a natter for tias to 4et4niae and we could sot aska ai^ proilieigr 
•loBg this line. 

7m^lag~fh«t wt hatve oerered the points you raise to yo«r satis- 
ttstica* -ws artt 



qfaelo 



ftey truly yours» 




losurtt 



126 UNITED STATES MONEY vs. 

there is at present a widespread movement to induce early 
action along this line. You will undoubtedly have noticed 
from the public press that there have been oi^anized in 
various states branches of an organization entitled The 
National Citizens' League, for the dissemination of infor- 
mation regarding our currency and banking problems, and 
it is to be assumed that the object of the league is to educate 
the people to understand the problems, and to comprehend 
also the necessity for prompt action by Congress. You will 
also have noted that practically the entire session of the 
American Bankers' Association now in convention at New 
Orleans has been devoted to consideration of Senator Al- 
drich's plan. It is quite likely that the favorable attitude of 
the members of the association will have considerable 
weight with Congress. These two circumstances would 
seem to indicate that a good deal of pressure will be 
brought upon Congress to pass this legislation at an early 
date. Whether or not such pressure will be effective is, of 
course, a matter for time to determine and we could not 
make any prophesy along this line. 

Trusting that we have covered the points you raise to 
your satisfaction, we are very truly yours, 

(Signed) F. A. Vanderlip. 

(By) A. H.^ 
A. H. Enclosures. 



This confession that "pressure" is to be brought on Con- 
gress and, of course, on members of Congress by the banks 
of the country is of the greatest significance and importance. 
That seems to be the bank way of getting legislation bene- 
ficial to banks, always. Further correspondence between the 
National City Bank and the author will be found in the 
chapter "The Legal Tender Joker." As the corporate cur- 
rency is not made a tender for the payment of private debts, 
the above statement that it is to be "legal tender" is not 
true. Notice that the organization cited as publicly pro- 
moting the measure, "The National Citizens' League," was 
the outgrowth of the action taken by the New York Cham- 
ber of Commerce March 2, 191 1, for the formation of such 
a "public" organization to corral the people and business 
men to support this Wall Street scheme. 



99 



CORPORATE CURRENCY 127 

National Bank of Commerct. 

The National Bank of Commerce is said to be the leading 
Morgan bank of Wall Street, with 40 directors, $25,000,000 
capital, $15,161,660 surplus and undivided profits, $95,- 
954,120 of individual deposits, and $80,377,170 of other de- 
posits ; its total resources being over $215,000,000. Another 
alleged Morgan bank, the First National, has $10,000,000 
capital, $21,189,000 surplus and undivided profits, and $160,- 
090,000 of resources. 

It is said that every important financial institution in New 
York, during the panic of 1907 or since, was practically 
forced or induced to surrender to the big Wall Street com- 
bine. And this combine in turn is known to be closely 
affiliated with the Rothschilds and other individual and in- 
corporated interests that control the vast billions of liquid 
and invested capital of Europe. 

The Boards of Directors of the National City Bank and 
the National Bank of Commerce, representing the two great 
dominating groups, Morgan and Standard Oil, are interlaced 
and bound together by certain powerful common directors. 
The same thing is true of The First National Bank of New 
York and The Continental and Commercial National Bank 
of Chicago. In fact these banks comprise "The Financial 
Big Four," now said to be morally bound together in an 
impregnable oifensive and defensive alliance, with which 
is alleged to be directly or indirectly affiliated practically 
every big bank, insurance and trust company, railroad and 
trust in the United States. No bank anywhere now would 
feel that it could safely resist the demands or refuse to 
follow any orders if made by this great consolidated and 
incorporated money power. 

This group of four banks has a billion dollars of re- 
sources, and the interests therewith are said to directly or 
indirectly control or dominate a large share of the $2,000,- 
000,000 of capital and $23,000,000,000 of resources of all 
the banking institutions of the country, and the $25,000,000,- 
000 of listed securities. And it is alleged that through these 
and other direct or indirect agencies this one great combine 
dominated by a mere handful of men to a large extent now 
controls practically everything worth going after in the 
United States. 

The National City Bank has 24 directors, the Bank of 
Commerce 40, and The Continental and Commercial Na- 



128 UNITED STATES MONEY vs. 

tional Bank 44, total 108; but there are many duplications, 
so that less than 100 men with their affiliations now seem 
to control about everything tangible in the country. With 
the start they have obtained, their limitless resources, the 
foundation of which largely consists of the deposits savings 
of the people, their ability to borrow billions of bank credit, 
and the boundless power at their command, if they are al- 
lowed to go on unchecked soon they will virtually own the 
republic and all its inhabitants. 

This "Big Four" is the head-center of the movement to 
induce Congress to create a private central bank, the Na- 
tional Reserve Association. And it will no doubt rule 
that corporation if it has to buy control of the stock of 
half the banks in the United States, as it has the resources 
to do, for with it thejr would get the right to print and 
issue without limit billions of dollars of corporate currency 
to be used as money, and power by manipulating the volume 
of the currency to permit expansion and force contraction 
by 24,392 banks of the $23,000,000,000 of bank loans and 
resources, thereby gaining life and death control over the 
business and activities of every borrowing individual and 
corporation; also power artificially and automatically to 
raise and lower the prices of all securities, property and 
labor by merely increasing and decreasing the discount rate 
and the supply of money. The directors of the National 
Bank of Commerce are : 

J. P. Morgan, Jr. E. J. Berwind 

Geo. J. Gould F. Cromwell 

Brayton Ives V. Morawetz 



Allen A. Ryan 
J. F. Dryden 
John Claflin 



S. Alexander 
H. Parker 
B. Duke 



A. D. Juilliard F. Sturges 

A. W. Krech J. N. Jarvie 

A. Iselin, Jr. Geo. F. Baker 

Levi P. Morton T. H. Hubbard 

Frank A. Vanderlip W. A. Day 

D. Guggenheim C. J. Blair 

H. P. Whitney V. P. Snyder 

P. D. Cravath W. Langdon 

Jacob H. Schiff C. A. Peabody 

H. P. Davidson W. A. Simonson 

H. A. Smith A. W. Mellon 



CORPORATE CURRENCY 129 

H. W. DeForrest Charles Lanier 

A. W. Wiggins C H. Russell 

F. L. Hine C H. Allen 

The following letter shows the interest and activity of 
that bank for the Aldrich Central Bank Plan : 



iSSSH. Nationm. Bank op CoMMCiice 

IN New York 



«» 



Jfumtry a« int. 



Aafr«4 CrMi«r 



CinoiniftU , 0. 
temr Birt 

Vt mn la rt^tipt of your fttrer of Pte«tfber ttOtb^ 
md in oaowor vould Mgr that «• Iikto not iaoaotf any printed lAttar 
roiatlTa to tlio AlAricb till* but toico ploanro la •ending yon 
under aoparate oovtr a poapiaet iesued by one of Our benke, aliov* 
lag the biU aa originally eubaitted soae tlae ego» and aleo the 
reviaad biU af reoeat date. 

Zh oaae tha bill should paee and beoose operatlTo, we 
do not onderatand fhet the Oovermjent wotild guarantee in any nay 
<aaiTen«y iesued by the Ifstionsa Reserre AanooiatiofU The writer 
haa aot before kia the annual veeeege of President Taft » but his 
reoolleotioa is thkt the Aldri^ bill was fsT^rjObly osentioned therein 

Youre respeotfuily, 




130 UNITED STATES MONEY vs. 

NATIONAL BANK OF COMMERCE IN NEW YORK. 

Capital, Surplus and Undivided Profits Forty Million 

Dollars. 

President, James S. Alexander. 
Vice-Presidents, Henry A. Smith, R. G. Hutchins, Jr. 
Cashier, Neilson Olcott. 

Assistant Cashiers, Oliver I. Pilat, Paris R. Russell, A. J. 
Oxenham, Samuel Wilcox. 

Manager Foreign Department, G. S. Mason. 

January 3, 1912. 
Alfred O. Crozier, Esq., / ' 
The Romaine, ^ .. ' 

Cincinnati, Ohio. 

Dear Sir : We are in receipt of your favor of December 
20th, and in answer would say that we have not issued any 
printed matter relative to the Aldrich bill, but take pleasure 
in sending you under separate cover a pamphlet issued by 
one of our banks, showing the bill as originally submitted 
some time ago, and also the revised bill of recent date. 

In case the bill should pass and become operative, we do 
not understand that the Government would guarantee in any 
way currency issued by the National Reserve Association. 
The writer has not before him the annual message of Presi- 
dent Taft but his recollection is that the Aldrich bill was 
favorably mentioned therein. Yours respectfully, 

H. A. SMITH, Vice-President. 

The Continental and Commercial National Bank. 

The Chicago member of the "Big Four" is The Con- 
tinental and Commercial National Bank. This has been 
called the Standard Oil institution of the West. Finan- 
cially, it is alleged to be the Siamese twin of the National 
City Bank of New York and brother-in-law of the Bank 
of Commerce and the First National. Following are its 
forty-four directors: 

J. Ogden Armour Edward Hines 

E. H. Gary Joseph H. Talbert 
A. J. Earling 'R. H. McElwee 

F. E. Weyerhaeuser T. P. Phillips 
W. J. Chalmers Alfred Cowles 
Frank Hibbard E. S. Lacey 



CORPORATE CURRENCY 131 

R. C. Lake C. H. Weaver 

R. Van Vechten James W. Stevens 

F. A. Hardy John C. Craft 

W. I. Osborn Eames MacVeagh ' 

Geo. M. Reynolds E. A. Cudahy 

J. C Black E. P. Ripley 

B. A. Eckert Chas. H. Thome 

A. Robertson J. F. Harris 

Robert T. Lincoln S. McRoberts 

W. H. McDoel E. A. Potter 

Joy Morton Wm. V. Kelly 

Darius Miller E. P. Russell 

A. F. Banks D. H. Bumham 

E. J. Buffington C. T. Boynton 

M. H. Wilson H. F. Perkins 

R. J. Dunham A. H. Milliken 

The following letter from its president, who has been very 
prominent in his support of the Aldrich Private Central 
Bank plan by way of public addresses and otherwise, was 
written on his return from the meeting of the American 
Bankers' Association at New Orleans, of which association 
formerly he was president : 

Capital, Surplus and Undivided Profits $30,000,000 
Continental & Commercial National Bank of Chicago 

George M. Reynolds, President. 
Edward S. Lacy, Chairman of Advisory Committee. 

Chicago, November 29, 191 1. 
Alfred O. Crozier, Esq., 
Care Plankinton House, 
Milwaukee, Wis. 

My Dear Sir: Your favor of the 21st instant, received 
during my absence from the city, has just been handed 
to me and I have noted contents of same. 

Under the revised plan as made by Senator Aldrich, the 
maximum amount of dividend to go to the banks subscrib- 
ing for the stock of the National Reserve Association ii 
S per cent. In addition to this, provision is made for the 
accumulation of a reserve or surplus fund to an amount 
equal to 20 per cent of the capital stock, so that the sub- 
scribing banks would get, for the present, provided the 
association is organized and the dividends earned, a divi- 
dend of 5 per cent; but in the event of the sale of the 



132 UNITED STATES MONEY vs; 

e«»rr*t..«w)*»fcw« amo wnmviMO Mionr* #9«,ooo,ooo 

TfTTrfffWlin WtP WfflfffPrffTW 

«f««hni» ^ ^ 

low li t I ■■ ViCfi«>«n« «Mlu*M O. ftCHUMOCB Sccnoa* M. CWtNiiiC SfMTN, 4«»rC*tmc« 

M WMiMCM »>c« Hn i MW MMKAKICt. « l«flCN C*M«« JOMM • «(««MStMNI. •••• C«I><«« 

e CMATT. Vwt»M«M>t MMtVtV C VCMHOH. A«at Cmwoi «lnt.«M W L*MM<ir. *««T CataM* 

I N CIUPMAN. Met tatiMM MOMC • tNltN. M«t CmmM OAM N««MAM, «•#' CMM«a 

,UM T WWCKHeil Wc(M««MW rMMK b SmCMIIO. A«,»rr«« 





Voreater 29th . 1911« 



Alfred 0. Crosier t Saq* , 

e/& Planklngton Rouse , 

KUwaulree, Wisoonsixi* 

1^ dear Sir: 

Your faror of the 2l8t instant , reeeired 
Airing sy absence from the city, has Just %een handed 
to as and Z haTe noted contents of same* 

under the revised plan as svade 'by Senator Aldrieh, 
the aaxiaaum aaount of diTidend to go to the banlrs subscrih* 
ing' Tor the stock of the national Reserre Association is %%% 
In addition to this, provision is made for the accumulation 
of A reserre or surplus Hund to an amount eqvuLl to 20X of 
Jhe capital stock, so that the subscribing banks would get^ 
tbr the present, provided the association is organised and 
His dlTldends earned, a dividend of 5X» but in the event of 
the sale of the stock or withdrawal from the association, 
it would ba paid foi^ the same at its book value, whiOh woul4 
liKlttde its proportioaata* share of the surplus or reserve* 

The ^aa does not propose that the credit of th^ 
•Ofvenbent be pledged to seeure the currency itiich will be 
l9Suod by Xt/^ asaociation* 



CORPORATE CURRENCY 133 




• 2« 



Bef erring to the prospeet for early faror* 
^lt"«etion>y Congress, I ^g to aay that while senti. 
wnt la rapidly eryetalizing arounA the ^ill , naturally, 
tt is a "bill concerning idiich acat people are not f amillar^ 
and it -vill prohahly "be necessary for a campaign of educate 
tioh to t)efiaged hcfore it can finally he succebsful, 

1 enclose herein revised plan as proposed hy 
Senator Aldrichy and "beg to remain, 

Yours -very truly. 




President • 



Stock or withdrawal from the association, it would be paid 
for the same at its book value, which would include its 
proportionate share of the surplus of reserve. 

The plan does not propose that the credit of the Gov- 
ernment be pledged to secure the currency which will be 
issued by the association. 

Referring to the prospect for early favorable action by 
Congress, I beg to say that while sentiment^ is rapidly 
crystalizing around the bill, naturally, it is a bill concern- 
ing which most people are not familiar, and it will prob- 
aMy be necessary for a campaign of education to be waged 
before it can finally be successful. 

I enclose herein revised plan as proposed by Senator 
Aldrich, and beg to remain, 

Yours very truly, 

G. M. Reynolds, President/* 



134 UNITED STATES MONEY vs. 

"J. P. Morgan & Co., Wall St., Cor. Broad, New York, 
Drexel & Co., PhUadelphia. Morgan, Grenfell & Co., 
London, Morgan, Harjes & Co., Paris. 

New York, November 28, 191 1. 
Alfred O. Crozier, Esq., 
Care Plankinton House, 
Milwaukee, Wisconsin. 

Dear Sir : In reply to your letter of the 24th instant we 
would say that we do not have any copies of the "Aldrich 
plan," and are unable to give you the information desired. 

Yours truly, 

J. P. Morgan & Co/' 



New voftK CLCARiNd House* 

77-03 CCOAM STRCCT. 



New YORK. IflTflirtftr 2?th, i9U» 



Alfred 0« Crosier, tsq,, 

Fl^nkington Eouse, 
Milwaukee, Wis* 

fieerSir:* 

Referring to yours of the d4th inst* , 

I would say that this ixistitution does not issue 

tny printed natter in conneotion with the AUrich 

9lan^ One of our tenks , howeTer , has issued a 

ttfpy of the Rerised Sdition of the Flan , which Z 

htert yiessurs in sending you unler separate oorer* 

Very truly yours. 




Manager » 

The document referred to was received. It was entitled 
"The New Aldrich Currency System, revised edition, 191 1," 
issued by the Fourth National Bank of the City of New 
York. 



CORPORATE CURRENCY 135 

New York Clearing House. 

'William Sherer, William J. Gilpin, 

Manager. Asst Manager. 

New York Clearing House. 77-83 Cedar Street. 

New York, November 29, 191 1. 

Alfred O. Crozier, Esq., 
Care Plankinton House, 
Milwaukee, Wisconsin, 

Dear Sir: Referring to yours of the 24th inst., would! 
say that this institution does not issue any printed matter 
in connection with the Aldrich plan. One of our banks, 
however, has issued a copy of the revised edition of the 



^/^u^ ^2r^ bfcoc^ O 




^^^^^IciJ^pe^ »cnr. g9, 1911- 



Alfred 0, Crozier 9 Esq. , 
Milwaukee 9 Wis* 

Dear Sir:- 

Answering your letter of Noveniber 
fe4 , 1911 , 1 regret to say that I am unable 
lio give you any infonnation in the matter you 
refer to. 




1 



136 



UNITED STATES MONEY vs. 



plan, which I have pleasure in sending you under 
separate cover. Very truly yours, 

(Signed) Wm Sherer, Manager." 

New York Stock Exchange. 

"New York Stock Exchange. 

Secretary's Office, 
New York, November 28, 191 1. 
Alfred O. Crozier, Esq., 
Milwaukee, Wisconsin. 
Dear Sir: Answering your letter of November 24, 191 1, 
I regret to say that I am unable to give you any information 
in the matter you refer to. 

Yours truly, 

George M. Ely, Secretary." 



€lmmhtx ti Qmtmm^re ti Host ^isie ti ^lebr ^tak 



IJ.BIU. 
■ t. 









wauABi. 



^m gsfi V9T. 88 « X9U, 



9««r Sir:- 

Z takt pleaturt la ttiidiflg to you, la reply 
to your roquest of Vortsiber 24tli» tlit Vontbly Ballet int 
of the Hew York CliMriber of OoBBtroo for IMkrob and April 
1911 9 iihiQh ooat Aia a report f roa the Ctaaaiber* a delegates 
to the Monetanr Coaferoaeo hald in Wathingtoa la Janoaiy* 
and also the debate upoa this report. 

Youra rery truly , 



Ci,^fcMr^. £».a/^ 



Secretary . 



Wt. Alfredo. Crosiei*. 
FlanVinton House » 
miwaukee. Wis, 



CORPORATE CURRENO^ 137 

New York Chamber of Commerce. 

"Chamber of Commerce of the State of New York* 

Founded April 5, 1768. 
A. Barton Hepburn, President. 

Sereno S. Pratt, Secretary. 

Chas T. Gwjmne, Asst. Secretary. 

Vice Presidents. 

Qeveland H. Dodge, Otto G. Bannard, 

James J. Hill, Arthur Curtis James, 

George F. Baer, John Qaflin, 

William A. Nash, A. Foster Higgins, 

J. Pierpont Morgan, James Talcott, 
Jacob H. Schiff, 

William H. Porter, Treasurer. 

New York, November 28, 191 1. 

Dear Sir : I take pleasure in sending to you in reply to 
your request of November 24th, the Monthly Bulletins of 
the New York Chamber of Commerce for March and Aprfl, 
191 1, which contains a report from the Chamber's delegates 
to the monetary conference held in Washington in January, 
and also the debate upon this report. 

Yours very truly, 

Sereno S. Pratt, Secretary." 

Mr. Alfred O. Crozier, 

Care Plankinton House, 
Milwaukee, Wisconsin, 

The Bulletins mentioned were received and are exten- 
sively quoted from by the author in Chapter "Wall Street's 
First Tlan'." 



ti 



The Fourth National Bank of the City of New York, 



James G. Gannon, President. 
Samuel S. Campbell, Vice President. 
Chas. H. Patterson, Vice President. 
Daniel J. Rogers, Cashier. 
E. W. Davenport, Asst. Cashier. 
Charles E. Meek, Asst. Cashier. 



138 UNITED STATES MONEY vs. 

New York, Friday, November 24, 191 1. 

Mr. Alfred O. Crozier, 

Care Plankinton House, 
Milwaukee, Wisconsin. 

Dear Sir: In reply to your esteemed favor of the 21st 
instant, we take pleasure in forwarding you under separate 
cover a copy of our latest publication on the "New Aldrich 
Currency System," revised, on. pages 6 and 7 of which you 
will find articles marked, which we think will answer satis- 
factorily inquiries made in your letter concerning divi- 
dends, etc. 

Thanking you for your interest, we beg to remain, 

Yours very truly, 

S. S. Campbell, Vice President." 

Union Trust Company of New York. 

**Edwin G. Merrill, President. 
Augustus W. Kelly, Vice President. 
John V. B. Thayer, Vice President and Secretary. 
Edward R. Merritt, Vice President. 
Carroll C. Rawlings, Trust Ofiicer. 

Henry M. Popham, T. W. Hartshome, Henry M. Myrick, 

Asst. Secretaries. 

Union Trust Company of New York, 

80 Broadway. 

All communications should be addressed to Union Trust 
Company of New York, P. O. Box 1015, Cable 

Address "Unitrust." 

New York, November 29, 191 1. 
Mr. Alfred O. Crozier, 

Care Plankinton House, 
Milwaukee, Wisconsin. 

Dear Sir : Replymg to your favor of the 24th instant, 
would say that this company has issued no printed matter 
explanatory of the "Aldrich plan," but I think if you will 
apply to the secretary of the American Bankers' Association 
in the Hanover National Bank Building, New York City, 
you will be accommodated with such literature as they may 
have on the subject. 

Yours respectfully, 

J. V. B. Thayer, Vice President." 



CORPORATE CURRENCY 139 

American Bankers' Association. 

The above letter is interesting as evidence that the Amer- 
ican Bankers' Association has its headquarters in the Wall 
Street district. Thus we have the body officially represent- 
. ing the entire banking system and the financiers of Wall 
Street brought together with headquarters in Wall Street 
in a great common effort to promote a private central bank 
for mutual benefit. 

The following official declaration by the American 
Bankers' Association that in his message of December 21, 
191 1, to Congress, President Taft endorsed the "Aldrich 
Plan," is of the highest importance as showing the Wall 
Street point of view, and particularly because Wall Street 
and the big banks generally know what they are talking 
about politically: 

The American Bankers' Association 

II Pine Street, New York. 

President : 
William Livingstone, President Dime Savings Bank, 
Detroit, Mich. 
First Vice-President : 
Charles H. Huttig, President Third National Bank, St. 
Louis, Mo. 
Chairman Executive Council: 
Arthur Reynolds, President Des Moines National Bank, 
Des Moines, Iowa. 
General Secretary: 

Fred E. Farnsworth, 11 Pine Street, New York City. 
Treasurer : 
J. Fletcher Farrell, Vice-President Fort Dearborn Na- 
tional Bank, Chitago, 111. 
Assistant Secretary: 

William G. Fitzwilson, 11 Pine Street, New York City. 
General Counsel: 
I Thomas B. Paton, 11 Pine Street, New York City. 
I Manager Protective Department: 
j L. W. Gammon, 11 Pine Street, New York City. 
i 



I40 



UNITED STATES MONEY vs. 




Imn^ 



V9mtb9r tSMrtar-ttvfiitii^ i9u, 



Mr, Alfred 0. Crosier, 
C/» The noilne, 
udaieton Artnue, 
Cineiimeti, Ohio. 



tmr 8lr» 

A«knoeledgins your fairer of Poe<1 N r tventywooeond , Z mi oeiii* 
lag to yott f under aepurote eorer » oneli litetruture as hae been iaouod 
from time to time from thia office on req^eat. We hare not pub* 
liahed*any matter in outlricbt aupport of the "Aldrich plan/ that ia, 
■»re than ia eonreyed^by theae dacumaata. 

Our laat Conrention, in Mp Orleam, vaa siren larsely in the die* 
euaaion of the Vational Reaerra Aaaooiation. There vera fourteen* 
fifteen addreaaea , all of abieh will be publiahed in our Amual ]hre« 
ceedinga. The AaaooiatioVi ia, of oourae, on reoord aa farorli^ the 
Vational Reaenre Aaaooiation plan, reaolutiona harlng been paaaed at 
our Executire Council meeting laat Itoy, and also at the Conrention ia 
Vaa Oileani. 



Referring to your inquiry about President Taft'e attitude, «e hare 
no further adrioes than extracta frooi the President's v-essage to Cong- 
ress, in ahich it appears that he endorsee tha " Aid riOh 'plan." 



Very truly you 



General 




CORPORATE CURRENCY 141 

December 27, 191 1. 
Mr. Alfred O. Crozier, 
care The Romaine, 
Middleton Aventie, Cincinnati, O. 

Dear Sir : Acknowledging your favor of December 22d, 
I am sending to you, under separate cover such literature 
as has been issued from time to time from this office on 
request. We have not published any matter in outright sup- 
port of the "Aldrich plan" ; that is, more than is conveyed 
by these documents. 

Our last convention in New Orleans was given largely 
to the discussion of the National Reserve Association. 
There were fourteen or fifteen addresses, all of which will 
be published in our Annual Proceedings. The association 
is, of course, on record as favoring the National Reserve 
Association plan, resolutions having been passed at our 
executive council meeting last May, and also at the conven- 
tion in New Orleans. 

Referring to your inquiry about President Taft's attitude, 
we have no further advices than extracts from the Presi- 
dent's message to Congress, in which it appears that he 
endorses the **Aldrich plan." 

Very truly yours, 

Fred E. Farnsworth, 
General Secretary. 

New York Life Insurance Company. 

The following shows the attitude of the big Wall Street 
insurance companies : 

New York Life Insurance Company 

New York, N. Y. 

Darwin P. Kingsley, President. 

November 28, 191 1. 
Mr. Alfred C. Crozier, 
Plankinton House, 
Milwaukee, Wis. 

Dear Sir: Replying to your favor of the 24th inst., I 
send you under another cover copy of an address delivered 
in April last in which I referred incidentally to the Aldrich 
Plan of Currency Reform. As you will see by the refer- 
ence, I am in favor of some such plan as Mr. Aldrich has 



142 UNITED STATES MONEY vs. 

outlined, because the present plan breeds panics instead of 
preventing them. Mr. Aldrich's plan is still under discus- 
sion and has been considerably modified since the first draft 
was published. It has just been heartily endorsed by the 
Bankers' convention at New Orleans after full con- 
sideration. 

The provisions covering the issue of circulating notes 
have, so far as I have noticed, been the least questioned of 
any. They deserve careful study. In a general way they 
provide for a gradual taking over of the privilege of issuing 
circulating notes — ^the banks being allowed to retain their 
present bond secured circulation, if they choose to do so, 
but not to add to it. When taken over, the Reserve Asso- 
ciation is to issue its own notes in place of those of the 
banks which have been redeemed. The Reserve Association 
is also to have power to issue additional notes within cer- 
tain well-defined limits, and upon certain conditions as to 
security and taxation. These conditions are such as to pro- 
vide a volume of currency that shall expand and contract 
according to the necessities of business. 

The clause respecting the security of notes, issued by the 
Reserve Association in the revised draft published in Octo- 
ber, reads as follows: "All note issues of the Reserve 
Association must be covered, to the extent of at least one- 
third by gold or other lawful money, and the remaining 
portion by bankable commercial paper as herein defined or 
obligations of the United States, but no notes shall be 
issued whenever the lawful money so held shall fall below 
one-third of the notes oustanding." 

"The notes to constitute a first lien upon all the assets of 
the National Reserve Association, and shall be redeemable 
in lawful money on presentation at the head office of the 
National Reserve Association or anv of its branches." 

As the capital stock of the Reserve Association is to be 
approximately $300,000,000, and the national bank circula- 
tion is less than $800,000,000, the notes of the association 
will be covered by one-third gold or lawful money and 
two-thirds by commercial paper of obligations of the 
United States, while the capital stock of the bank will be 
an additional security equal to more than one-third of pres- 
ent issues. It would appear, therefore, that the notes of 
the association will be amply secured. 

There is every reason to suppose that the management 
of a National Reserve Association, such as is outlined by 



CORPORATE CURRENCY 143 

Mr. Aldrich, will be composed of men of as high character 
as those who will occupy high places in the Government, 
and that they will be even more experienced in financial 
affairs. There seems to be also ample provisions for pre- 
venting the association from falling under the control either 
of politicians, on the one hand, or of what is called "Wall 
Street influence," on the other. In short, the wisdom of 
both politicians and of financial experts will be united under 
a system that will make the currency and credit systems of 
the country available for legitimate business, and the sinis- 
ter influences in both politics and finance will not be able 
to use them for selfish purposes. 

Under the present system the currency of the country 
does not expand when business expands, and when a bank's 
funds are all loaned out its customers can borrow no more. 
During such times currency accumulates from taxes in the 
Treasury, and is deposited in banks at the discretion of the 
Secretary of the Treasury. It is therefore within the power 
of the banks and of the Secretary of the Treasury to make 
money scarce if they .choose to do so, and when a certain 
limit has been reached, it becomes scarce in spite of them. 

In my judgment the plan of the National Reserve Asso- 
ciation will go a long way toward preventing stringency 
and panics, and in equalizing interest rates throughout the 
country. 

As to the prospects of favorable action by Congress, no 
one can say, but if bankers and business men generally 
demand the enactment of Mr. Aldrich's plan into law, it will 
be done. The banks have naturally taken more interest 
thus far than the business men, because it is their specialty ; 
but from now it will be up to the business men to consider 
the plan and express their opinions. 

Very truly yours, 

Darwin P. Kingsley, President. 

This is an interesting contribution to the subject, and a 
valuable one. The statement that "the bankers have nat- 
urally taken more interest thus far than the business men, 
because it is their specialty" — is true and highly important. 
The intimation in these letters from the highest financial 
circles of Wall Street that the Aldrich plan approved unani- 
mously by Wall Street contains iron-clad provisions to pre- 
vent this private corporation, as Mr. Kingsley says, "from 
falling under the control either of politicians on the one 



144 UNITED STATES MONEY vs. 

hand or of what is called 'Wall Street influence' on the 
other" IS, we believe, rather Pickwickian, and belongs to the 
domain of subtle humor. 

The above published correspondence, of course, will be 
sufficient to establish to the satisfaction of everybody that 
all the big banks, trust companies, insurance companies and 
financiers of Wall Street are united and exceedingly active 
supporters of the Aldrich plan for a great private central 
bank, owned exclusively by the banks and controlling the 
entire public currency of the United States. And there 
is ample public evidence by published speeches and articles 
made by railroad presidents and trust magnates that such 
corporations, all largely under the control of Wall Street, 
are also behind this measure. These special interests always 
are "non-partisan," or rather "bipartisan," whenever they 
must have both Republican and Democratic legislative votes 
for a measure conferring upon themselves greatly increased 
profits and power. And it is illuminating to see that such in- 
terests, and President Taft in his message to Congress on 
December 21, 191 1, earnestly urge that this question, which 
in every sense and in the highest degree is political, shall 
be made non-political and non-partisan. If this plan suc- 
ceeds, it will keep the great majority of the people, the 
masses, who certainly are opposed to substituting a corpora- 
tion currency for Government money, and control of all 
money by a private syndicate under act of Congress, divided 
about equally between the Republican and Democratic par- 
ties. This will enable the relatively small number of sup- 
porters of the Aldrich plan to act as a dominating "balance 
of power" and force the scheme upon the country notwith- 
standing it is offensive to and opposed probably by three- 
fourths if not nine-tenths of all of the voters of the United 
States. 

These powerful Wall Street interests have the undoubted 
"legal" right to want and to fight to obtain control in their 
hamis, or in a private corporation owned by their banks, of 
a monopoly of the entire public currency, the money sup- 
ply of all the people. Presumably they do not think it 
would work to their disadvantage, or lessen the power and 
profits of the banks and of Wall Street. We have a right 
at least to suspect that a private central bank under their 
direct or indirect control would increase, in fact vastly aug- 
ment, their profits and power, and this at the sole expense 
of the people. 



CORPORATE CURRENCY 



145 



Do the people for their welfare want just what Wall 
Street desires and is seeking for its interests? Congress 
must soon decide this question for the people, and the people 
should lose no time in making Congress fully aware of 
the popular will. 



CHAPTER VIII. 
WALL STREET'S FIRST "PLAN/* 

New York Chamber of Commerce in 1906 Originates Present 

Central Bank Scheme. 

The New York Chamber of Commerce xS an association 
for mutual interest of the brains of Wall Street. Its power- 
ful guiding hand is seen in the provisions of every banking 
and monetary system and in the language of every financial 
statute adopted since the association was founded, on April 
5, 1768. It is largely entitled to the credit and blame for 
all successes and failures. For in the long, run it usually 
has had its way and forced its will upon the country and 
into the provisions of law. 

The chronological record of its achievements in this line 
printed in its Monthly Bulletin for April, 191 1, is its claim 
and boast that the above is true. That record shows : In 
1819 it opposed repeal of the charter of the first central 
bank, the Bank of The United States, unsuccessfully. In 
1841 it adopted a memorial in favor of a Central National 
Bank. This was in the old days when President Andrew 
Jackson vetoed the bill renewing the charter of the second 
central bank, the United States Bank, thereby destroying 
the institution because of its pernicious and dangerous 
activity in politics, the same thing that caused the downfall 
of the first central bank. Both were private corporations 
seeking to control the public currency and money supply for 
private profit and power. 

It is said that President Biddle of the Old Central Bank 
called on President Andrew Jackson in the White House 
telling him that he had power to bring about or to prevent 
President Jackson's renomination, and would renominate 
him if he signed and defeat him if he vetoed the bill renew- 
ing the Central Bank's charter. "Old Hickory" replied: 
"I believe you are correct ; but that is too much power for 
one man to have in this Republic, and 'By the Eternal rU 
veto that bill!' " And he did so. 

146 



CORPORATE CURRENCY 147 

President Jackson so thoroughly exposed the sordid du- 
plicity of the bankers and high financiers, and their purpose 
to use the imperial powers of the central bank to rule poli- 
tics and the Government in the interest of Wall Street in- 
stead of the people, that it was considered useless to attempt 



another central bank until the country foj-got the vidoua 
sins of the old ones. The men of Jackson's day are all 
dead. A new generation has taken their places. At last 
the same old cat comes out of the same old hole, for on 
October 4, 1906, the New York Chamber of Commerce 
again declares for a great central bank, and this has led to 
the proposal now called "Aldrich Plan." Whether Democ- 
racy can be made to forget the past as Wall Street softly 
strokes its fur and soothingly whispers into its capacious 



148 UNITED STATES MONEY vs. 

ear those clever, enticing and deceptive words "non-partisan 
and non-political monetary, banking and currency reform," 
and will swap Jackson for Aldrich, as its future Patron 
Saint, the country soon will know. If that great, popular 
and patriotic organization, with its splendid past achieve- 
ments for popular government, and the undying precepts 
and examples of its great historic leaders, by its voluntary 
consent now can be thus easily chloroformed as it stands 
on guard to protect the people against their insidious and 
PQwerful enemies, it will be the greatest of the many mys- 
terious miracles wrought by Wall Street. 

Examination into the history of the New York Chamber 
of Commerce, the list of past and present members, officers 
and directors, induces the belief that the Chamber always 
is ruled and guided in its every act and resolution by the 
masterful minds that also rule Wall Street, and to a large 
extent the big banks, insurance and trust companies, rail- 
roads and trusts of tfie United States, and, many believe, 
seek to influence or dominate politics and parties that shape 
and administer the laws and government of the republic. 

The present officers, as printed on a letter of November 
28, 191 1, which writer received from its secretary, are: 
President. A. Barton Hepburn. Secretary, Sereno S. Pratt. 
Treasurer, Wm. H. Porter. Asst. Sec*y> Chas. T. Gwynne. 

Vice-Presidents. 

Cleveland A. Dodge Otto T. Bannard 

James J. Hill Arthur Curtis James 

George F. Baer John Claflin 

William A. Nash A. Foster Higgins 

J. Pierpont Morgan James Talcott 
Jacob H. Schiff 

These officers and the Chamber's board of directors, and 
their aMiations, is "Wall Street." 

New York Chamber of Commerce's 1906 Plan. 

To the courtesy of The National City Bank of New York 
we are indebted for a printed copy of the full report of 
the "Special Currency Committee" of the New York Cham- 
ber of Commerce, dated October 4, 1906, which report was 
adopted by the Chamber. 

The members of the committee were John Claflin, Frank 
A. Vanderlip (now president of National City Bank), Isidor 
Strauss. Dumont Clarke and Charles A. donant. 



CORPORATE CURRENCY 149 

The report is voluminous and illuminating. We quote 
substantially in full the portion advocating a central bank, 
as follows: 



"A Central Bank of Issue. 

In our opinion, the best method of providing an elastic 
credit currency, the volume of which could never be exces- 
sive, would be the creation of a central bank of issue under 
the control of the Government, This central bank should 
have branches in the leading cities, and should have dealings 
only with banks. Although its capital stock might be pri- 
vately owned or distributed among the banking institutions 
of the country, it should be under the direct control of a 
board of governors appointed, at least in part, by the Presi- 
dent of the United States, for it should perform some of 
the functions now imposed upon the United States Treasury, 
and should at the same time be managed not exclusively for 
private gain but for the public good as well. This bank 
should have a large capital, not less than $50,000,000. It 
should carry a large reserve of gold and should act as cus- 
todian of the metalic reserves of the Government and is its 
agent in redeeming all forms of credit money. It should 
also be receiving and disbursing agent for the Government, 
doing at its branches the work now done at the sub-treas- 
uries. It should hold the 5 per cent redemption fund now 
deposited in the Treasury by the national banks for the 
current redemption of their bond secured notes, and should 
redeem national bank notes both at its central office and at 
all of its branches. 

Advantages of a Central Bank. 

The operations of central banks in Europe, especially in 
France, Germany, Austria-Hungary and the Netherlands, 
make it impossible to doubt that the existence of such a 
bank in this country would be of incalculable benefit to our 
financial and business interests. Such a bank in times of 
stress or emergency would be able by regulation of its note 
issues to prevent those sudden and great fluctuations in rates 
of interest which have in the past proved so disastrous. Fur- 
thermore, it would have the power to curb dangerous ten- 
dencies to speculation and undue expansion, for by the con- 
trol of its rate of interest and of its issues of notes it would 
be able to exert great influence upon the money market and 
^pon public opinion. Such power is not now possessed by 



ISO UNITED STATES MONEY vs. 

any institution in the United States. Under our present 
system of independent banks, there is no centralization of 
financial responsibility, so that in times of dangerous over- 
expansion no united effort can be made to impose a check 
which will prevent reaction and depression. This is what 
a large central bank would be in a position to do most 
effectively. A central note issuing bank would supply an 
elastic currency varying automatically with the needs of the 
country. This currency could never be in excess, for notes 
not needed by the country would be presented for deposit or 
redemption. 

Resume of Advantages, 

The advantages of such a central bank, in brief, would be 
as follows: 

(i) It would supply the country with an elastic cur- 
rency responsive to the varying needs of business. 

(2) It would tend to steady the rate of interest at all 
seasons, and to give relief in periods of industrial and finan- 
cial stress, for its large resources would enable it to meet 
extraordinary and sudden demands for both capital and 
currency. 

(3) It would relieve the Federal Treasury of the duties 
now imposed upon the division of issue and redemption, and, 
on account of its intimate relations with the money market, 
would be in a position, as the Treasury is not, to protect 
itself against a prolonged drain upon its reserves. 

(4) It would do away with the cumbersome sub-treasury 
system and keep the money of the country always at the 
disposal of trade and commerce, so that the Government's 
collections and disbursements would cause neither contrac- 
tion nor inflation. 

9|c 4c 4c ^ 4e 4e kl 

We, therefore, make the following recommendations : 
I. That legislation be enacted which shall provide the 
country with a flexible and elastic bank note currency ; and to 
this end we su^fgest that either one of the two following 
plans might wisely be adopted : 

(a) Let there be created a central bank of issue similar 
to the Bank of Germany or the Bank of France ; such bank 
to deal exclusively with banks ; its stock to be owned in part 
by banking institutions and in part by the Government; 
but in its management representatives of the Government 
shall he supreme. This central bank shall issue currency, 



CORPORATE CURRENCY 151 

rediscount for other banks, hold public money, and act as 
agent of the Government in redeeming its paper money and 
making its disbursements. 

Or (b) let any national bank whose bond-secured circu- 
lation equals 50 per cent of its capital have authority to 
issue additional notes equal in amount to 35 per cent of its 
capital. 

Let such additional notes be subject to a graduated tax as 
follows : The first 5 per cent, taxed at the rate of 2 per 
cent per annum ; the second 5 per cent, taxed at the rate 
of 3 per cent ; the third 5 per cent, taxed at the rate of 4 per 
cent; then an issue equal to 10 per cent of capital, taxed at 
S per cent ; then an issue equal to 10 per cent of capital, 
taxed at 6 per cent. 

Let the proceeds of this graudated tax constitute a guar- 
anty fund, in the custody of the Government, for the re- 
demption of the notes of failed banks. 

To insure the prompt retirement of notes when not 
needed, let redemption agencies be established at sub-treas- 
uries and other convenient points. 

Let all the notes of a bank be alike in form, and let it 
be the duty of the United States Treasury to redeem all the 
notes of a failed bank, as at present, in full on presentation, 
and to recoup itself from the assets of the failed bank and 
from the guaranty fund. 

2. That the law restricting the retirement of national 
bank notes to $3,000,000 per month by the deposit of law- 
ful money be repealed. 

3. That future issues of United States bonds be not 
made available as a basis for the issue of national bank 
notes. 

4. That the laws regulating the operations of the United 
States Treasury be amended in sudi a manner that they 
shall not, as now, interfere with the money market ; and to 
this end we suggest a law requiring that all money in the 
general fund of the Treasury above a reasonable working 
balance be deposited in national banks." 

Other portions of the above quoted report concede : 

1. That prices and rates of interest tend to increase 
and decreiase with the volume of available currency and 
credit. 

2. That the increase and decrease of a bank's cash re- 
serve automatically operates to increase and decrease its 



IS2 UNITED STATES MONEY vs. 

total loans of credit. If its loans total ten times its cash 
reserve, loans should be reduced $10,000 for each $1,000 
shrinkage of cash in its reserve. 

3. That stock market speculation always is stimulated 
and increases whenever the quantity of available money 
and credit is increased or the rate of interest is lowered, 
and is checked and decreased whenever the available supply 
of money and credit is decreased or the rate of interest is 
raised. 

4. That the quantity of credit banks can grant in the 
shape of ordinary interest bearing bank loans depends 
wholly and absolutely upon the amount of lawful money 
they can get to put into their reserves. The profits of banks 
automatically increase and decrease with the volume of 
such loans. (On the average, including all state banks, 
and trust companies, banks issue and keep afloat a volume 
of loans of credit aggregating at least ten times the total 
cash resources in their reserves.) 

The dominating importance of these four conceded 
axioms of finance and banking, so easily understood by 
everybody familiar with the "cause and effect" of the or- 
dinary elemental "law of supply and demand," will be ap- 
parent as we proceed. Particularly so when we compare 
the provisions of the above "First N. Y. Chamber of Com- 
merce Plan," adopted October 4, 1906, with the "Second 
N, Y. Chamber of Commerce Plan," adopted by the Cham- 
ber March 2, 191 1 (see Monthly Bulletins for March and 
April, 191 1 ), and with the "Aldrich plan" announced in 
January, 191 1, and the "revised Aldrich plan" issued in 
October, 191 1. 

Note particularly that the above report says: "By the 
control of its rate of interest and of its issues of notes, it 
would be able to exert great influence upon the money mar- 
ket and upon public opinion. Such power is not possessed 
by any institution in the United States," Just so! That 
is the "power" Wall Street seeks by making it a private 
instead of a public institution. 

Briefly, suppose there was some potential individual, or 
a group of men, with "axes to grind" by stock market 
manipulations, emitting and selling vast flotations of stock 
and bond issues, forming trusts, consolidating railroads into 
systems, maintaining low interest rates for themselves to 
pay and high rates for the public, and increasing their 
political influence to obtain legislative favors and judicial 



CORPORATE CURRENCY 153 

immunities. And suppose these persons were able abso- 
lutely to control the supply, and from day to day regulate 
the volume, of money or currency for use in the United 
States by the banks and the people. Under the above four 
axioms, would not they have absolute power, if they wanted 
to use it, to: 

1. Increase interest rates by making available money 
scarce. 

2. Decrease interest rates by making money over-plenty. 

3. Increase the prices of all securities, property, com- 
modities and labor by inflating the quantity of money and 
credit available with which to buy. 

4. Decrease the prices of all securities, property, com- 
modities and labor by contracting the quantity of money 
and credit available with which to buy. 

5. Profit both by such artificial increase and decrease of 
prices, because of having exclusive advance information as 
to the extent of such inflations and contractions of the 
money supply and just when they will take place. 

6. Vastly increase the interest profits of the banks by 
increasing the currency available for bank reserves, thereby 
enabling banks to inflate the volume of their loans of credit 
ten times such increase in cash reserves. 

7. Greatly decrease the earning power and profits of 
banks by contracting the currency, thereby reducing bank 
cash reserves and forcing banks to contract the volume of 
their loans ten times as much. 

8. Make or break the prosperity of the country, by this 
power to enable banks to increase their loans to commercial, 
industrial and business borrowers, or to force banks unex- 
pectedly to contract loans and make such borrowers curtail 
their activities and reduce the volume of their business, and 
their profits. 

9. Cause panics any time, whatever the general and 
natural conditions of the country may be, by suddenly con- 
tracting the currency to such an extent as quickly to rob the 
banks of a large portion of their cash reserves, thus forcing 
banks to demand payment of their loans in such vast vol- 
umes that borrowers would be compelled instantly to slaugh- 
ter prices and make forced sales of securities, properties, 
and commodities at ruinous figures for money to pay such 
bank loans, thus causing general demoralization and univer- 
sal panic. 

10. Take advantage of panic so caused, to acquire cheap 



154 UNITED STATES MONEY vs. 

the stricken and crippled enterprises and industries, turn- 
ing them over to their trusts, thus removing competition and 
enabling trusts to increase profits by increasing prices 
against consumers and by reducing the wages of labor. 

11. Force labor wholesale into idleness by such panics 
or semi-panics, or terrify it with the fear of general lack 
of employment, thereby enabling reduction in wages and 
increase in the hours of labor, ''teaching labor a lesson," 
so that unresistingly and unprotestingly it will forever sub- 
mit to the demands and the conditions imposed by the Wall 
Street masters of the great employing corporations. 

12. So control the supply of money and credit as to 
make it forever impossible to finance or start any important 
enterprise or undertaking until control and most of the 
profits are surrendered to them. 

13. Master and control the banks in their every act, be- 
cause of the power to control the volume of their profits, 
cash reserves and loans of credit, making them 

(a) Buy securities, perhaps undesirable, at high prices; 

(b) Make loans to certain parties and corporations; 

(c) Call loans of business men generally; 

(d) Call loans to punish certain parties; 

(e) Call certain loans to force the dumping upon the 
market of the particular securities up as collateral ; 

(f ) Call loans, generally, to help force upon the mar- 
ket in vast quantities the securities held as collateral, thus 
aiding to wreck prices during a "bear" raid when insiders 
want to buy cheap ; 

(g) Make undesired loans to the secret "pools" on stock 
exchange collateral, thus causing refusal of applications for 
legitimate business purposes during a "bull" campaign when 
insiders are driving prices to high levels to unload upon 
the public; 

(h) Induce granting loans to trusts and refusal of ac-^ 
commodations to the competitors of trusts; 

(i) Loaning on call to trusts and stock gamblers at 2 
per cent and charging ordinary business borrowers 6 per 
cent; 

(j) Reducing bank's ability properly to care for regular 
customers by inducing loans as favors to individuals or 
corporations in position to give preferences in the purchase 
of supplies and by way of transportation rates or advan- 
tages to favored trusts or individuals ; 

(k) Crowding for favors to the extent that banks to 



CORPORATE CURRENCY 



IS6 UNITED STATES MONEY vs. 

avoid offending will overloan, or violate other provisions 
of the laws, perhaps involving bankers in criminal prose- 
cution. 

14. Permanently increase interest rates paid by bor- 
rowers for bank accommodations. 

15. Permanently reduce the rate of interest paid by 
banks to depositors. 

16. Extort from the political party in power special leg- 
islative, executive and judicial privileges and immunities 
under threat or fear that if not granted, panic will be 
caused at the right moment to discredit the administration, 
the party in power and its political leaders, and cause its 
defeat in approaching National or State elections. 

17. Increase alarmingly the prevalence of graft and cor- 
ruption and betrayal of public trust by officials by insiduous 
methods of moral if not legal bribery and opportunities to 
"participate" in flotations and "deals" where profits will be 
certain and tempting. 

18. Complete mastery of politics and parties and of the 
Government itself, through 24,000 influential and widely 
distributed banks as a vast and invincible political machine 
that by means of bank loans granted for bribes or called in 
for punishment will have life and death power over the 
business of almost every individual and corporation 
throughout the United States. 

The above 18 things are a few of the many potential 
possibilities if those few Wall Street men had private con- 
trol of the public currency. And does anybody doubt that 
they will obtain control and be able to do these things if 
Congress commits the folly of taking control of the public 
currency away from the Government and grants it to a 
mere private corporation? 

Second New York Chamber of Commerce Plan. 

The first plan, adopted by the chamber on October 4, 
1906, in its language was sound, honest and patriotic, v It 
proposed a central bank under the absolute control of the 
Federal Government It said "in its management repre- 
sentatives of the Government shall be supreme." Under 
the "Aldrich Plan," of the 46 directors of the National 
Reserve Association the banking fraternity will name 42 
and the Government of the United States 4. 

On March 2, 191 1, the "Second New York Chamber of 



CORPORATE CURRENCY 157 

Commerce Plan" for a central bank was formally adopted 
by the chamber. 

This plan, hereinafter given, was printed in the cham- 
ber's "Monthly Bulletins" for March and April, 191 1. Au- 
thor has copies of these bulletins, obtained from the cham- 
ber's secretary. This plan and the "Revised Aldrich Plan" 
are practically identical. This is conceded, and both seem 
to claim priority. Under these later "plans" the central 
bank is to be a private corporation, exclusively owned by 
the banks, instead of a public institution controlled by 
the Government, as the chamber's "First Plan" demanded. 
If Congress adopts this "revised version," those few Wall 
Street men soon will own enough banks to control the cen- 
tral association. Then they can do all of the things above 
enumerated, because they will absolutely control the entire 
money supply of the United States. 

Why did the New York Chamber of Commerce radically 
change from one extreme to the other, from a central bank 
controlled by the Government of 94,000,000 people to a 
central bank with governmental powers controlled by Wall 
Street? 

Was its original action, in 1906, insincere? Did it resort 
to the trick of pretending to favor a Government central 
bank, thereby disarming criticism and allaying suspicion 
and opposition while an irresistible demamd for "elastic- 
ity," a central bank and monetary "reform" was being 
worked up, secretly intending at the opportune moment to 
"shift the cards" and hastily push through Congress under 
whip and spur a scheme for a private central bank with a 
complete monopoly of the entire public currency? 

The representatives of the New York Chamber of Com- 
merce to the currency conference organized by the National 
Board of Trade, held in Washington, D. C, January 18, 
191 1, were Paul M. Warburg, chairman, Welding Ring, 
Algernon S. Frissell, Samuel Sachs and Maurice L. Muhle- 
man. They persuaded the conference to adopt the views 
of the New York Chamber of Commerce. The delegation 
reported their success to the Chamber on Eebruary 2, 
191 1, their report in full in its March Bulletin was laid 
over until the March 2, 191 1, meeting, when it was dis- 
cussed and formally adopted. The report was made by 
Paul M. Warburg, of the Wall Street International Bank- 
ing House of Kuhn, Loeb & Co., chairman, and reputed 
author 6f the private central bank scheme, the "second 



IS8 UNITED STATES MONEY vs. 

New York Qiamber of Commerce plan," now known of- 
ficially as the "Aldrich plan." 

Leaving out the long preamble, following is all that por- 
tion of said report comprising in full the resolutions 
adopted advocating a private central bank : 

"Resolved, That this convention unequivocally declares 
in favor of the creation for the United States of a central 
banking organization, based upon the following general 
principles : 

1. That such central organization be a corporation en- 
dowed with a large stock capital and not merely an asso- 
ciation of banks. 

2. That its stock capital be owned by incorporated bank- 
ing institutions, including trust companies, whether under 
national or state charter, willing to assume equal duties as 
a basis for equal privileges. 

3. That its administration be divided between the Gov- 
ernment, the member-banks and the commercial classes, in 
a manner which will safeguard against individual, sectional 
or political domination. 

4. That its business be limited to transactions with the 
Government and with the incorporated banking institutions 
which become stockholders, i. e., member-banks, except as 
provided in paragraph 9, clause b. 

5. That dividends on its stock be limited to a fixed mod- 
erate return and profits in excess of such dividends, after 
providing for a reasonable surplus and em^ergency fund, 
be turned over to the Government. 

6. That its business be conducted through* branches, to 
be established in the banking districts into whilch the coun- 
try shall be divided, the member-banks of theVseveral dis- 
tricts constituting joint associations, and shal|[ing in the 
administration of the branches. 

7. That it shall, free of charge, receive and ^disburse all 
moneys of the United States Government in places where 
it shall have offices. 

8. That it shall not allow interest on deposits, 

9. That it shall have power : . 

(a) To issue circulating notes payable in gold, to be 
secured by gold and negotiable paper, and, if necessary, 
eventually to retire the present bond-secured banl* notes to 
a limited amount by Government bonds ; 

(b) For the regulation of its gold reserve to buy and 
sell bullion, and to contract for loans of gold, ani under 



CORPORATE CURRENCY 159 

proper restrictions to deal and invest in foreign bills of 
exchange ; 

(c) To require the member-banks to keep with it a 
portion of their reserves prescribed by law ; 

(d) To rediscount, only for member-banks, commercial 
paper under regulations prescribing the limit of amount 
for each member-bank, the maximum time to run, and de- 
termining the degree of guarantee to be provided by the 
joint associations of member-banks of each district; 

(e) Under careful and proper restrictions to discount 
approved American bank acceptances ; 

(f ) To transfer funds standing to the credit of a m6in- 
ber-bank, to the credit of any other member-bank at any 
of its branches ; 

(g) To buy and sell the bonds and treasury notes of 
the United States. 

10. That the central organization is ultimately to become 
the sole note-issuing power. 

Resolved, furthermore, that copies of this resolution be 
sent to the President of the United States, to the members 
of the National Monetary Commission and to each senator 
and representative in Congress. 

On the day preceding the meeting of the conference Sen- 
ator Aldrich had published his plan for banking and cur- 
rency reform, and copies thereof were in the hands of the 
members of the conference. The general provisions of the 
plan were explained in an instructive address by Assistant 
Secretary of the Treasury A. Piatt Andrew. 

Your delegates are greatly pleased to report that this 
plan, barring a few comparatively unimportant details, com- 
plied so fully with the principles established in the fore- 
going resolution that subsequent resolutions endorsing the 
broad principles of the Aldrich plan, without committing 
the conference as to every detail of the same, and advo- 
cating the creation of a business men's league to assist in a 
campaign of propaganda and education, were unanimously 
adopted by the Committee on Resolutions read as follows : 

Resolved, that there be appointed by the chairman of this 
conference a committee of seven to organize a Business 
Men's Monetary Reform League, which shall have its main 
office in Chicago, with branches in the various centers of 
the United States, where local committees shall constitute 
the management. The object of this league shall be to 
carry on an active campaign of education and propaganda 
for monetarv reform, on the orincioles. without endorsing 



i6o UNITED STATES MONEY vs. 

every detail, of reserve association with branches in the 
business centers of the country as outlined in Senator 
Aldrich's plan. 

Resolved, that the delegations here present be requested 
to use their influence in the commercial bodies they repre- 
sent to gain the active cooperation of these bodies and of 
their individual members in the work of the league as 
defined. 

Resolved, that the Business Men's Monetary Reform 
League be requested when organized to provide for a com- 
mittee on propaganda and education, and also for a com- 
mittee on legislation, whose duty shall be to further mone- 
tary legislation on the principles adopted by the league. 

Resolved, furthermore, that the committee on organiza- 
tion be requested to bring about the cooperation and, if 
possible, a consolidation between this league and the Na- 
tional Currency League, already organized about a year ago 
by the Merchants' Association of New York. 

All of these resolutions were presented to the conference 
at its afternoon session by the chairman of the Committee 
on Resolutions (Paul M. Warburg), and after instructive 
debate they were carried by an overwhelming majority." 

Another portion of the above-quoted report says that of 
the eleven members of the Committee on Resolutions three, 
Mr. Warburg, Mr. Ring and Mr. Sachs, were members of 
the delegation from the New York Chamber of Commerce, 
and that Paul M. Warburg was chairman of the committee 
and presented, and presumably prepared, the above-quoted 
resolutions. It is said that the National Citizens' League, 
now actively promoting the Aldrich plan all over the coun- 
try, with headquarters at Chicago, was the outgrowth of 
this plan originated by the New York Chamber of Com- 
merce, the "Business Men's Monetary Reform League" 
having been merged into the same. It will be remembered 
that this new organization is the one spoken of by the 
National City Bank of New York in its herein before 
quoted letters as doing such valuable work promoting the 
Aldrich plan in many states. 

The Chamber's April, 191 1, Bulletin shows that upon 
April 2, 191 1, the report was taken up, discussed and 
adopted, thus becoming officially the "New York Chamber 
of Commerce Second Plan." Following is a portion of the 
discussion published in said Bulletin: 

"Paul M. Warburg, chairman of the delegation to me 



CORPORATE CURRENCY i6i 

monetary conference held in Washington, January i8th, 
called up the report of the delegation presented at the last 
meeting and laid over for action at this meeting. 

Mr. Warburg. — ^Mr. Chairman and ijiembers of the 
Chamber: The report of the delegation to the monetary 
conference at Washington was placed before you in printed 
form at the last meeting and sent to every member since 
that meeting. I shall not, therefore, take time to read the 
report, but will simply move its adoption. In doing so, I 
would like to say a few words. 

I think you could not fail to have been impressed, upon 
the reading of our report, with the remarkable degree of 
unanimity with which the proposed Central Reserve Asso- 
ciation was approved. The delegates met, and aften ten 
minutes they toiew that they all agreed on that question. 
We then met with the delegates of the New York Produce 
Exchange and the Merchants' Association. It took us 
about half an hour to agree. We went to Washington to 
the conference. At that conference there were representa- 
tives from all over the country and from Canada. After 
discussion the Central Reserve Association was agreed on 
with but one dissenting voice. 

Meanwhile, Senator Aldrich's plan had been brought 
forward, and it recommended the same plan that had been 
recommended by our resolution. Since then a body of 
bankers had met in Atlanta, over twenty, representing all 
parts of the country, and they again after going over this 
plan most thoroughly and giving it seardiing criticism, 
unanimously adopted it, with some amendments as to de- 
tails. They adopted the underlying principles of the re- 
port So there can be no doubt that the country is ready 
for this plan and for its adopt" n. There is no doubt, at 
the same time, that the prospect of getting this plan 
through in the next session of Congress will depend upon 
the chances of making it a non-partisan measure. As a 
party measure, the plan cannot succeed. If it is a plan that 
comes forward in a non-partisan form, there can be no 
doubt of its success ; as Mr. MacVeigh has said, there is no 
difference between a Republican and Democratic depositor. 
Everybody alike looked miserable during the panic, arid it 
is more to the interest of the people of small means than it 
is to people of larger means that this plan should be carried 
out. 

The Monetary Reform League, with which our report 



i62 UNITED STATES MONEY vs. 

deals, will meet by the end of this month in Chicago. Very 
important men have been addressed, and have signified their 
willingness to serve. It is strongly hoped that the Chamber 
of Commerce will co-operate in this matter when the time 
comes, and will strongly join in this eflfort. On behalf of 
the delegates, I move the adoption of this report. 

J. Howard Coperthwait. — * * * Now, the idea I have 
that this will become a political question is this: Senator 
Aldrich is no longer a senator, he has no more power in the 
Republican party, but a letter that I received from Wash- 
ington intimates that he will still retain the position as head 
of the Monetary Commission. I suppose he can do that or 
not as he sees fit. Now, if any bill is to be gotten through 
Congress in the next two years it must be gotten through 
a Democratic Congress, and if this appears to be a proposi- 
tion by Senator Aldrich alone, it is not likely to receive a 
great deal of favor ; but, if it is proposed by the Monetary 
Commission, why then it will meet with a different sort of 
reception, and the Monetary Commission is the one to 
decide this question. 

Maurice L. Muhleman. — Mr. President, and members of 
the Chamber, I hesitate, as a member of the delegation that 
went to Washington, to oppose Mr. Coperthwait's motion, 
but there are several things that I believe we have a right to 
differ upon in the statement that was made by him. In the 
first place, the report of the delegates to Washington does 
not indorse Senator Aldrich's proposition as such. It states 
its own proposition first, and then says that Senates 
Aldrich's proposition is in harmony in general principles, 
and in essentials, with its own proposition. The proposition 
which the delegates put before the conference in Wash- 
ington was absolutely in harmony with the action which 
this Chamber took in 1906, and absolutely in harmony with 
the policy of this Chamber dating back to 1840. Mr. 
Coperthwait is afraid that we are going too far in this 
report in even suggesting that Senator Aldrich's plan has 
some essential features which are similar to the plan which 
we have elaborated, which was embodied in the resolutions 
which we took to Washington, and which met the support 
of the representatives of every commercial body in the 
National Conference except one. Mr. Coperthwait seems 
to be afraid that this subject is going to become the football 
of politics. Gentlemen, unless the commercial bodies of this 
country take up this question as they should, it may become 



CORPORATE CURRENCY 163 

the football of politics; and it is up to the commercial 
bodies to take hold of the question, and see to it that it is 
kept out of politics and handled as it should be handled by 
the business interests and not by the politicians. 

Mr. Coperthwait says that there seems to be no need for 
haste. The only reason why Mr. Warburg presses for 
immediate action is this : 

This report was presented at the last meeting of the 
Chamber, and by special request it was laid over to be acted 
upon today. The movement of the commercial bodies of 
the country, which is instigated through the instrumentality 
of the National Board of Trade, under whose direction a 
national committee has been appointed, proposes to meet in 
Chicago before the end of the month, as Mr. Warburg has 
stated. If the action of this Chamber goes over another 
month, this Chamber has failed to place itself upon record 
upon this most important question. If it is postponed, the 
Chamber has adopted a shifting policy. Should the Chamber 
be afraid again to announce its policy upon this question, 
which it definitely stated in 1906, as the leading important 
body of the country ? It is for this reason, Mr. Chairman, 
that I rise to oppose the motion of Mr. Coperthwait, and I 
hope that the Chamber will accord to the delegation that 
went to Washington the indorsement of adopting its own 
report. 

Samuel Sachs. — * * * As New York speaks, so the 
rest of the country speak, and if the Chamber of Commerce 
of New York should not support this resolution, the whole 
question* of banking reform and currency reform will die 
out, and will not again come up until we are face to face 
with the next panic, whenever that may occur. Now, I 
earnestly hope that the gentlemen here assembled in this 
Chamber will give their support to the work of Senator 
Aldrich, and that they will indorse the report of Mr. 
Warburg. 

Mr. Warburg's motion that the report of the delegation 
be adopted was then carried. 



!■-' ■•■ 1""^^^"^. " ' ■"• I ^^W^B-^— ^^^BW^^— ^^■■^■IB^^— ^^BBBjj^^m^^- 



CHAPTER IX. 
A CONFIDENCE GAME. 

NiiiAty Per Cent of All Banks the Victims. State Banks and 

Trust Companies Hard Hit. 

Judged by the cold facts plainly stated in the "Revised 
Aldrich Plan," Wall Street is playing upon the banks of 
the country wholesale a successful and clever confidence 
game. As in "three-card monte," "green goods," and other 
"sure thing" games, it is made to appear a cinch for the 
banks; but, as usual, the victims will get nothing but 
"experience" for their pains and money. 

What Banks Will Get. 

Under the "Aldrich Plan" a given bank will get : 

1. National Reserve Association stock equal to 20 per 
cent of its own capital stock. It must pay par. Dividends, 
if earned, will be 4 per cent, or at most 5 per cent. If there 
are no profits it gets no dividends. There is no guaranty 
by anybody. 

2. A supply of currency by paying for it dollar for 
dollar. This currency, like any lawful money, can be put 
into bank's reserve. A bank could buy gold or treasury 
notes just as cheap. 

3. A "mere hope" that the bank can "rediscount" some 
of its commercial paper at the Central Bank. But this will 
not be an enforcible legal right. It is entirely within the 
discretion of the Central Bank whether it will take any 
certain piece of commercial paper or rediscount at all for a 
particular bank. It is a one-sided option. A bank can only 
hope, and pray — and beg. 

4. Consolidation of all bank reserves in one financial 
"Jack-pot" under the absolute control of a mere private 
corporation? No, but perhaps later by its "regulations" 
the association will require this to be done. It may at times 
then be as impossible for banks to get their reserve money 



VnU STREET:^ THIS IS THE FRMOUS "SHUL 

eanE' under which shell is he 

pen! YOU CATCH THE PEOPLE UnD 

I'LL s/i/n '£n ^njp T/ien »e'll 
y^iHficif UP. - PCPHflPS. 

COUNWr BMKER:- but the people. 

YOU M/INT TO SHIN ARE Mr NElOH- 
BQRS A NO fRIENDS. EXCUSE HE! 



''•^"■T^^— ^T^^^-^l©*? 



i66 UNITED STATES MONEY vs. 

out of this "one reservoir" as it was during the panic of 
1907 from New York banks that repudiated their obliga- 
tions and loaned the money to insiders to buy securities 
cheap from the public. 

5. A mere promise that the Central Bank will perform a 
miracle and stop panics, or at least perhaps help the bank 
save itself in case of a "run." But the bank cannot compel 
the Central Bank to do so. And as was done when the big 
New York trust companies were put in a hole by "runs'* 
purposely started or stimulated, permanent control of the 
bank may be demanded by the interests behind the Central 
Bank as the price of Central Bank aid, even in a panic. 

6. Participation in the boasted "town-meeting-republican- 
form-of-government** monarchy control of one of the local 
twigs of one of the branches of the big Central Bank tree, 
to the extent of the proportion of the total $300,000,000 
National Reserve Association stock held by the local bank. 

In round figures, the capital of 24,392 reporting national 
and state banks is $2,000,000,000. The pending bill makes 
the association's authorized capital 20 per cent of the com- 
bined capital stock of the "eligible" banks, say $400,000,000. 
But to be safe call it $300,000,000. 

The following shows the per cent of the total control 
enjoyed by any given bank having the capital indicated, the 
smallest outside national or state bank or trust company, 
with $25,000 capital, would own $5,000 of the $300,000,000 
Central Bank stock and have the magnificent although indi- 
rect and remote power over the management and operations 
of the National Reserve Association obtained by owning 
and voting one and two-thirds one-thousandths of one per 
cent of the total three hundred million stock ! 

Just one Wall Street institution, the National City Bank, 
with $25,000,000,000 capital will own one thousand times 
as much Central Bank stock, or as much as a thousand such 
sized banks. 



Size of Bank. 


Central Stock. 


Per Cent of C 


$25,000,000 


$5,000,000 


.0166^ 


1,000,000 


200,000 


.0066 J4 


500,000 


100,000 


.0033J4 


200,000 


40,000 


.ooi3j^ 


100,000 


20,000 


.0006^ 


50,000 

oc r\r^\ 


10,000 

r rmr\ 


.ooo3>4 



CORPORATE CURRENCY 167 

Don't laugh! It's the truth. Figure it out yourself — 
then get someone to kick you for consenting to be a mere 
pimple on the face of the other fellow's moon. 

What Banks Must Give. 

The "revised version" of Aldrich's New Testament plays 
up as an afterthought and a generous "concession" the 
proposal to "allow" state banks and trust companies to 
"participate in and enjoy" the manifold blessing vouchsafed 
to those financial institutions contritely approaching the 
Wall Street "Mercy Seat" and espousing "out-of-sight-and- 
unseen" the cleansing Aldrich plan. 

The records, however, of the New York Chamber of 
Commerce show that that program was decided on long 
before the Aldrich tag was tied on to the predetermined 
"plan." It may have been left out of the "original Aldrich 
plan" so it could be made to appear "a concession to 
popular demand." 

But . there is no more danger of state banks and trust 
companies being "left out in the cold" when Wall Street 
sets out to forrti for its use a universal money trust than 
there is chance for a lone 'possum to escape from a hungry 
colored camp-meeting crowd. 

All banks and trust companies look alike to "high finance." 
They are all "Jonahs" and Wall Street is the "whale." 
Aldrich was only trawling, with his "plan" as the "spoon." 
Every state bank and trust company making a grab for the 
shining, whirling "spoon," too late will discover that all it 
has got is a hook in its jaw, the other end of the line being 
firmly and permanently attached to the reel on Wall Street 
great Central Bank pleasure yacht. 

When high finance sets out to promote a trust it takes in 
enough concerns to stifle all serious competition. A suc- 
cessful Central Bank trust for eliminating all vexatious 
competition that might increase the rate of interest paid 
depositors or decrease the rate charged borrowers, and for 
combining under one central control the entire money supply 
of the people, could not be formed if state banks and trust 
companies are left out. Such state institutions hardly would 
allow Congress to grant to a private confederation of 
national banks a monopoly of the entire public currency 
that they might win away the deposits of state institutions 
by publicly boasting: that only national banks had been made 



masammprB^^^'fs^^fi&^B 



i68 UNITED STATES MONEY vs. 

fish the people and the outside bankers must seem to the 
"insiders" who plan the "sport" and will feast on the 
"catch" ! 
lAider the Aldrich plan a bank must give : 

1. Twenty per cent of its capital to be permanently 
employed at not over 5 per cent, invested in Central Bank 
stock that it can never sell. 

2. Ultimately it will lose its present currency issuing 
power. 

3. It assumes its share of a serious and increasing burden 
of maintaining the gold standard and reserve and of keeping 
at par an enormous and increasing volume of currency with- 
out the aid of the Government credit now behind the public 
currency and gold standard. The Reserve Association will 
have power and means by which it could financially wreck 
any or all banks if it so desires; and this may happen in 
spite of the association because of a wild inflation of its 
currency and injudicious rediscounting. 

4. By joining this private association, it incurs an in- 
definite and almost unlimited liability by staking, everything 
on a new experiment that it cannot guide or control and 
from which it never can escape. It takes the chance of the 
most reckless of gamblers. 

5. Voluntarily it surrenders to the power of a single 
corporation that vital and large portion of its resources 
represented by its deposited reserves (the association having 
legal power to require this by "regulations"), without get- 
ting for its use even the customary 2 per cent now allowed 
by reserve banks. In return, there is no legally enforcible 
obligation on the central bank to grant currency in time 
of need or re-discount a single dollar of paper. Every- 
thing done by the central bank legally is only a "favor." 
Such favors may be granted to the big banks that will con- 
trol the central bank and be withheld from the unimportant 
small banks and trust companies. 

6. Morally and legally it becomes responsible for the 
policy and every act of a private institution in which it has 
but an insignificant interest and over which it can exercise 
not the slightest effective control. It will have responsi- 
bility without power. 

7. It is surrendering its independence by irrevocably 
joining a financial combine or trust absolutely controlled 
by outsiders and strangers having nothing in common with 



CORPORATE CURRENCY 169 

interests and the welfare of the local people may be over- 
looked or ignored in the shuffle of "big business," by "big 
business" for "big business." 

It must legally and irrevocably bind itself to obey all 
"regulations" hereafter adopted, whatever they may be, 
thus making itself a firm but helpless part and servant of 
a great central bank trust. 

8. It is agreeing to pay any discount rate and interest 
hereafter fixed from time to time by a private corporation 
for the exclusive profit of such corporation. 

9. It repays the people for enacting laws granting spe- 
cial privileges and immunities that have made bankin^f the 
most powerful and profitable of all business, by joming 
with Wall Street in a conspiracy to create a dangerous 
money monopoly to enormously swell the already inordi- 
nate profits of Wall Street and the big banks, the entire 
extra burden falling upon the people of the United States. 

10. For the hope of unneeded extra profits, it would 
cause its officers, directors and stockholders to forget their 
higher obligation as citizens of the republic by joining in 
the demand that Congfress adopt the "Aldrich plan" that 
forces the Government without a cent of compensation to 
turn over into the hands of a private corporation, for its 
use and profit, as loanable deposits every dollar of the bill- 
ions of future revenues to be collected by taxation and 
otherwise by the Federal Government for the next fifty 
years. 

11. It joins in the plan that by law would forever pro- 
hibit the Government paying out a dollar for any purpose 
whatever, except through such private corporation, thus in 
effect creating a guardian for the Government. 

12. In the hope of gain, it supports the movement for 
taking from the Federal Government, where under the 
constitution it always has remained, control of the issuance 
and volume of the currency that a private monopoly of the 
entire public currency may be granted to an irresponsible 
private corporation to be forever used and loaned out at 
the cost of the people of the United States for the profit 
of such corporation. 

13. It does this fully realizing that such private syndi- 
cate, simply by raising and lowering the discount rate or 
by expanding and contracting the volume of currency, or 
both, can to a large extent automatically increase and de- 
crease the prices of all securities, property and human 



170 UNITED STATES MONEY vs. 

labor to the loss of the public and the profit of the insiders. 

14. It favors granting to such corporation absolute 
power to force such bank against its will or desire to con- 
tract its loans to an unlimited extent, to require its own 
solvent and responsible customers suddenly and unexpect- 
edly to pay up their loans even if it entails the ruinous sacri- 
fice of securities and property, closing down of industries, 
general idleness and distress, panic and financial chaos. 
Such corporation can do all this and more in the name of 
that high-sounding slogan, "elasticity/' in the most easy 
and quick manner by calling in and canceHng a portion of 
its "currency," thereby automatically depleting the cash Re- 
serves of the banks and under the law forcing them to call 
in loans aggregating at least ten times such shrinkage of 
reserves. 

This voluntary surrender of the bank's interest and 
honor and that of its customers and friends to possible and 
probable defilement by the libertines of "high finance" who 
may have seized control of the central bank, if induced by 
the lust for greater profits, would be an exhibition of busi- 
ness prostitution and brutality unexampled in the lowest 
red light district of a metropolitan city. 

15. It is deceiving itself and its business customers into 
believing, or at least claiming, that the "Aldrich plan" will 
stop panics, where in fact it is an express grant by Con- 
gress to a private syndicate of power quickly and easily to 
cause panics by suddenly making money scarce and dan- 
gerously contracting bank credits whenever the manipu- 
lators desire to increase interest rates and the purchasing 
power of their money and "credit" by wrecking prices while 
like wild beasts they shop for bargains at the expense of the 
stricken people in the ruins they themselves have made. 

16. The American Bankers' Association by recently in- 
dorsing the "Aldrich plan," after its Currency Committee 
had obtained the changes it desired, has officially (on No- 
vember 24, 191 1 ) committed the banking fraternity to the 
plan as now urged and to each of the provisions thereof. 
But no individual bank is bound by that action, and many 
banks resent such action. 

Thus the banks have deliberately made themselves an 
issue, a political issue, by demanding that Congress take 
from the Government and turn over free to a private cor- 
poration, to be exclusively owned and controlled by the 
banks, a billion dollars or more of currency or money to 



CORPORATE CURRENCY 171 

be forever used for the profit of private interests, same to 
be put into the reserves of the confederated banks, thereby 
enabling such banks with relatively no extra investment to 
swell their ordinary loans of bank credit nearly ten billion 
dollars and annually collect interest on this huge extra 
total from the people of the United States. 

Now that the banking system, by action of tHe banks 
themselves, has been brought under the spotlight, the public 
no doubt will insist upon the complete elimination of every 
harmful practice that careful and thorough investigation 
may show exists in the monetary and banking systems of 
the United States. And they will require that all dis- 
closures be made on oath in a public congressional investi- 
gation. 

There are among bankers thousands of honest, high- 
minded, law-abiding, patriotic gentlemen. When these 
questions come to be understood, most of such men will 
refuse to follow Wall Street and the big bankers in their 
raid upon the Government, but will stand shoulder to shoul- 
der with their neighbors and friends and in the interest of 
the common good demand that any institution controlling 
the public currency must be a public institution under 
absolute public control. 

State and Savings Banks—Trust Companies. 

By changing present law and granting national banks 
authority to make loans on real estate and requiring no 
cash reserve held against "time deposits," the Aldrich bill 
lays the foundation for national banks ultimately to monopo- 
lize the entire business of banking. Already they are start- 
ing savings departments genersdly. National banks thus 
are to be powerfully equipped by the law to invade the 
exclusive field of state and savings banks and trust com- 
panies and take away their deposits, business and profits. 
And inasmuch as national banks divert the use of their 
resources to such new channels they take away from trade 
and commerce the money and credit that the present law 
intended should be used exclusively for the accommodation 
of commercial business. Why should national banks cease 
being mere banks of discount? Why should they become 
real estate loan agencies, trust companies and savings banks ? 
Surely they do not need the extra profits, or deposits, for 
their present profits are excessive and increasing rapidly. 
There are plenty of state and savings banks and trust com- 
panies to adequately serve the public needs in those lines. 



172 UNITED STATES MONEY vs. 

It is only the Wall Street mania for monopoly, the desire 
to grab all business anywhere that will yield a profit. And 
as it is out to organize a real money trust, with the National 
Reserve Association as the directing head and currency 
"holding company," they propose that their national banks 
shall be granted such power that all state and savings 
banks and trust companies can be forced to surrender to the 
Wall Street combine or have their deposits, business and 
profits taken away and diverted to national banks. 

It will be easy for national banks to entice away the 
deposits of other banks and trust companies by the claim 
that only members of the National Reserve Association 
have been made "panic proof" by the Government- If 
necessary, a little panic "object lesson" can be started to 
frighten depositors of state institutions into hurriedly trans- 
ferring their deposits to national banks. With an artificial 
panic in 1907 about $50,000,000 of deposits were scared out 
of trust companies and into national banks in New York 
City in a few days. 

If the Aldrich bill passes, state institutions can survive 
only by joining the Reserve Association. And if they join 
that money trust they will be ruined. They will surrender 
their independence, will be exploited and squeezed and 
their present influential and independent officers and direc- 
tors will in effect become mere errand boys to execute the 
orders of the men of big business, who will be masters of 
the ruling central association. There is only one way of 
escape for state and savings banks and trust companies. 
They must help defeat the private central bank scheme and 
induce Congress to create the public institution for the pro- 
tection of banks and business described in a later chapter. 

The aggregate capital and resources of all reporting 
financial institutions Jime 7, 191 1, were: 

Number. Kind of Bank. Capital. Resources. 

7,277 National Bank $1,019,633452 110,383,048,694 

12,864 State Banks 462,944,684 3,747,786,296 

635 Mutual Savings Bank (None) 3,762»401,62& 

1,249 Stock Savings Bank 72,177,899 889,911,677 

1,251 Loan & Trust Go's 385,782,933 4,665,110,868 

1,116 Private Banks 21,872,416 182,824,220 

24,392 Total $1,952,411,084 $23,631,083,380 

The T;2TJ national banks with lo billion dollars of re- 
sources are expected ultimately to swallow or rule the 17,1x5 
other financial institutions that have 13 billion dollars of 
resources. The job will be easy if the Aldrich bill be- 



CORPORATE CURRENCY 173 

comes law. Its provision that no reserve need be held by 
a bank to secure "time deposits" is the bait expected to 
induce state banks and trust companies blindly to grab the 
concealed barbed hook. That is wildcat banking. No 
state bank or trust company can afford to jeopardize its 
solvency and the safety of depositors. And if they become 
reckless of the interests of depositors and the public, state 
laws will be passed to restrain them. Then to escape even 
present state laws they must become national banks and 
jump into the arms of Wall Street. No state bank can 
afford the sacrifice, and yet all will be sand-bagged into 
submission if the Aldrich bill ever becomes law. Wall 
Street is determined to control every institution in the 
United States receiving the people's deposits or loaning 
credit. If it can not accomplish it one way it will try an- 
other. Big business has discovered that the easiest and 
most profitable way to dominate and gradually absorb all 
business and wealth and rule the republic and its 94,000,000 
inhabitants is to obtain physical control of the country's 
entire supply of money and bank credit. It thus will gain 
the same power over the life of all business that a private 
monopoly of the supply of all air and water would have over 
all human life. To accomplish this it is only necessary to 
stop the Government issuing money and then be in position, 
not necessarily to own all the banks, but to control their 
policy and actions, to force them to obey in concert the 
orders from the central association that will be ruled by 
Big Business. 

The Aldrich Bill grants to the National Reserve Associ- 
ation power to master and direct the policy and acts of 
every one of the 24,392 financial institutions of the country, 
once they join the association and in writing legally bind 
themselves to obey its present and future "regulations." 
And the association will have power indirectly to force 
them all to surrender and join this universal combine — this 
huge incorporated money trust. 

Every state institution and national bank must turn itself 
inside-out and expose to the agents of the central associa- 
tion all facts about its condition and business, including its 
confidential information and data as to the financial stand- 
ing, resources and business operations of all its customers. 
And because the association is a mere private corporation 
and its agents not sworn public officials, all this sacred in- 



f ■»-»' 



174 UNITED STATES MONEY vs. 

The trusts thus easily can learn the true condition and opera- 
tions of competitors, and ultimately drive them out of busi- 
ness. The 24,392 financial institutions will in effect be 
spies to discover and record the business secrets of every 
borrowing individual and corporation, placing the informa- 
tion thus gained at the disposal of Big Business through 
the central association. It is said that Wall Street now has 
a complete card index showing in minute detail the exact 
condition of hundreds of thousands of business men scat- 
tered in every state who do not even suspect that they are 
being constantly watched and trailed by high finance. The 
Aldrich bill enables this system to be made general and 
uses the banks to pry the secrets out of their customers 
under threat of refusal of bank accommodations. This one 
scheme will greatly facilitate Wall Street's financial, indus- 
trial and political conquest of the United States. 

In New York City it is said that a central agency, a trust 
company, has been established by the banks to which cus- 
tomers of all banks are expected to go and disclose every 
fact about their financial condition and present and proposed 
business operations. It is like being physically examined 
by a doctor before obtaining life insurance. This infor- 
mation is at the disposal of all the cooperating banks and 
trust companies, and the customer is charged by the agency 
for the privilege of thus disclosing his most confidential 
business secrets. The tendency of the times is to make 
mere human beings and their welfare subservient to the 
will and profit-interest of the banks, to put the dollar above 
the man. The American people should reverse this. In 
the law and in business they must put the man above the 
dollar. 

It is said that the big Wall Street banks have established 
a sort of financial "rogues' gallery," using a modified Ber- 
tillon system, thumb or finger prints, for identification. But 
it is the depositors who must submit to this new scheme, 
instead of the big rogues of "high finance" who use the 
depositors' money. 

This plan of appraising everybody for bank purposes no 
doubt will be extended to all cities and the process of con- 
solidating little banks into big ones will go on until in each 
town every business man will depend for money and credit 
upon the will and pleasure of just one central agency ; and 
the operations of these city agencies will be under the direc- 



CORPORATE CURRENCY 175 

Street. This is the ultimate program and will be carried 
out as soon as Congress passes the Aldrich bill. It is part 
of the process of forming one great centralized combine 
under the sway of high finance to monopolize and direct 
the use of the entire supply of money and bank credit for 
the whole country. The head agency no doubt will have 
a copy in ready reference form of the data possessed by 
every city agency. This business beaurocracy will be the 
climax of the Russianizing of all American business by 
Wall Street. It will be an easy matter then for those di- 
recting this machine to ruin any business man or corpora- 
tion by shutting off its supply of money and credit, dogging 
its business operations, and diverting its business by pres- 
sure on its customers exerted through this underground 
bank channel. When one central agency comes into pos- 
session of accurate knowledge of the details of every man's 
aflFairs, the few men who control and use that agency for 
their purposes soon will own absolute and permanent con- 
trol of the business of every man and corporation. This 
system will restrain trade, suppress competition, raise prices 
to consumers and foster and increase every evil and danger 
of the present, and yet these acts cannot be reached by the 
anti-trust law, because in passing the Aldrich bill Congress 
will legalize a trust of the trusts and make lawful the prac- 
tices above descri^jed. 

A trust company surely has nothing to gain by tying up a 
fifth of its capital in association stock, and it has much to 
lose by legally shackling itself to the big central machine. 
And private banks get no advantage by incorporating and 
doing the same. 

Savings banks with a capital stock would get no benefit. 
Instead they should be fighting the growing practice of 
national banks of starting savings departments. This must 
eventually injure savings banks, as will the proposed making 
of real estate loans by national banks. 

The 635 mutual savings banks cannot join the Reserve 
Association if they would. They have no capital stock. 
They are owned absolutely by their depositors. They are 
co-operative institutions and as such have been wonderfully 
successful. The average interest received on deposits by 
mutual savings banks is 50 to 100 per cent higher than the 
average interest paid on all deposits by all national banks. 
And yet the mutual institutions receive and loan only cash. 



i;6 UNITED STATES MONEY vs. 

volume ten times their aggregate cash, as do national banks. 

If their cash deposits are diverted to national banks it 
will cause excessive and dangerous inflation of bank credit. 
It will unsettle prices, and values, and stimulate reckless 
gambling speculation at the expense of sound, legitimate 
business. A firm brake must now be put on the lo for i 
multiplication of fictitious credit by the banks or the financial 
air-castle soon will go to smash and with it the prosperity 
of the country. 

The only net assets of the 7^77 national banks are their 
capital, surplus and undivided profits, $1,933,134,055. Prac- 
tically the entire resources of the 635 mutual savings banks 
of the country, aggregating $3,762,401,625, are cash savings 
deposits, net assets. Possessing nearly double the net assets 
of the 7y277 national banks, these 635 mutual savings banks, 
owned by their 7,690,973 depositors, who with their families 
represent nearly one-third of the 94,000,000 population of 
the United States, are utterly ignored by the Aldrich Cen- 
tral Bank plan. If these three billions of cash savings 
deposits were transferred to national banks it would increase 
the loaning power and profits of national badcs 200 per cent, 
inflate their credit loans over thirty billions of dollars ! 

Panic endangers these mutual banks the same as other 
banks and fills with anxiety or terror the hearts of these 
millions of hard-working American citizens and their wives 
and children, and yet no protection is to be given to them 
or the banks that contain the savings of a lifetime. In fact, 
the plan is to entice the deposits away from mutual savings 
banks and into the national banks. These are the very 
people who most need the protecting care of the Govern- 
ment. The more wealthy depositors of national banks 
usually can look out for themselves. No provision at all is 
made in the Aldrich bill for these mutual banks. 

In the New England states (Maine, New Hampshire, 
Vermont, Massachusetts, Rhode Island and Connecticut) 
there are 466 national banks. They have net assets (cap- 
ital, surplus and undivided profits) $192,096,507. The cap- 
ital stock of these banks is all owned by a few thousand 
people. 

But the same states have 413 mutual savings banks with 
no capital stock, but with $175462,872 of accumulated 
surplus and undivided profits and $1,366,710,866 of savings 
deposits, a total of $1,542,173,738 net assets owned by their 

-'^•:^77.«^46 deoositors. In fart. \\\e ^v^netrvKip^ rpqniirreR of all 



CORPORATE CURRENCY 177 

national banks in those states are but $848,000,503, the larger 
portion of which are not net assets but the result of loans of 
credit. Even such inflated total resources are only about 
half the amount of the actual net assets of the mutual sav- 
ings banks. Will the senators and congressmen from those 
states go in for Wall Street and the national banks and 
ignore the rights and welfare of 3,377,546 savings depositors 
who are residents of those six states ? 

In Ohio the three mutual savings banks have 112,935 
depositors who own the $62,512,536 of net assets, the sav- 
ings and accumulated profits. This is more than half of the 
entire net assets (capital, surplus and undivided profits), 
$103,175,186, of the 380 national banks of that state, the 
entire capital stock of such national banks being owned by 
relatively few persons. If Congress is to legislate for people 
instead of for dollars it never will pass the Aldrich bill to 
increase the excessive profits of a few hundred thousand 
national bank stockholders and ignore nearly eight million 
humble savings depositors and their families, or nearly one- 
third of the population of the United States. 

National banks take the profit made with the people's 
deposits away from the millions of depositors and give most 
of it to the relatively small number of stockholders. If the 
facts showing the aggregate losses sustained and charged off 
by national banks could be revealed it would astonish the 
country. Hundreds of millions if not billions have been so 
lost and the facts concealed from depositors and the public. 
Some losses are unavoidable, but many are due to reckless, 
unbusinesslike or dishonest loans made on the "you scratch 
my back and Til scratch yours" basis by conspirators who 
often acquire control of a bank to obtain the deposits of the 
people or credit based thereon for use in outside speculations 
or business ventures. The United States has no real bank- 
ing system, such as is found in leading European countries. 
Over there, those who manage a bank are bankers and 
nothing else. All loans are made on a strict business basis. 
Here in too large a degree bank directors have only a 
nominal interest in the stock of the bank, their chief business 
being other than banking. They only became directors to 
obtain adequate credit for their regular business. They can 
not be blamed. It was the only way they could get sufficient 
credit, because others were doing the same thing and would 
utilize all the bank credit available unless forced to divide. 



178 UNITED STATES MONEY vs. 

and divide use of the bank's credit between themselves 
instead of running the institution in a way to safeguard 
depositors and impartially serve the community that sup- 
plies the deposits and the law that created and protects the 
bank. In a sense, American banking to a considerable 
extent has degenerated into a scramble for control of money 
and bank credit, a sort of buccaneering adventure, a fight to 
g^in the rich fruits obtained by controlling and using for 
personal profit the deposit savings of the public. This by no 
means can be said of all banks or bankers or of every town. 
But in another chapter will be found conclusive evidence that 
more than half of all national banks have been guilty of 
deliberate acts that would cause them to forfeit their charters 
if the laws were properly enforced. 

The whole system is wrong and scientifically rotten and 
it IS getting worse constantly. 

Almost every crime short of deliberate murder is believed 
to have been committed in this fierce fight for control (par- 
ticularly in New York) of these big quasi-public institutions 
that exist at all only because the law created and maintains 
them. It may not become necessary for the Government 
actually to seize and administer the banks impartially and 
honestly for the benefit of depositors and the general wel- 
fare. But drastic laws rigidly regulating the banks^ and 
their practices are imperative, or soon the whole system will 
go to smash. Only inordinate profits have enabled them to 
charge oflf and conceal staggering losses and survive. If 
the tenking system was properly managed and all favoritism 
and graft and discriminations eliminated, the reduction in 
the volume of losses and increase of business would enable 
banks to pay 4 per cent or 5 per cent for cash deposits and 
charge only 4 per cent for credit loans and commercial dis- 
counts, and still realize greater net profits for the banks. 
Every banker knows this, and many deeply regret the fact, 
but so many are interlaced and bound together by mutual 
interest and inside investments, few seem to have the 
courage or feel that it would be safe to take a positive 
independent stand for the correction of the acknowledged 
abuses and dangerous defects of the system. So any remedy 
must come from without instead of from within. Law is 
the only power that can reach and remedy the evils and 
Congress alone can act. Because these conditions exist, the 
entire banking system quakes with fear and influential 



I 



CORPORATE CURRENCY 179 

even talks about a genuine investigation of the banking 
system. The bankers fully realize the danger of having the 
curtain raised, for they know what is behind the scenes. 

A bank with $1,000 cash can loan $10,000 "credit,'* while 
an individual with $1,000 of money can loan only $1,000. 
As increasing wealth sharpens the competition between indi- 
vidual investors and the banks for desirable mortgage and 
other loan«, this law-made advantage may enable banks to 
monopolize investments by cutting interest rates. This 
would tend to force individuals to leave their funds on 
deposits in banks at nominal interest, largely because they 
could not safely and profitably invest the same. Each 
$1,000 so deposited enables the banks to increase credit 
loans $10,000, which increases the power and advantage of 
the banks in their competition for loans against those who 
actually own the deposits. As the income that individuals 
can derive from their capital tfius grows less annually and 
the cost of living and general prices go up because of this 
resulting inflation of the volume of bank credit loans, the 
individual more and more will be sacrificed for the benefit 
and profit of incorporated wealth. The effect if not the chief 
object of the Aldrich plan will be vastly to increase the 
already over-swollen power and profits of the banks at the 
expense of individual investors. That is the whole tendency 
of modem banking, finance and legislation. It is ah alarm- 
ing symptom. This course should be reversed. The law 
must place the welfare of the individual above that of 
incorporated dollars. 



CHAPTER X. 
A CENTRAL BANK TO BE BOUGHT? 

$1,000,000 ''Promotim Fund" Raised. 

Testifying in November, 191 1, at the public hearing before 
the Senate Interstate Commerce Committee, Wharton 
Barker, a prominent, respected and wealthy retired banker 
and capitalist of Philadelphia, is reported to have positively 
affirmed that at that very time an enormous $1,000,000 
cash fund was being raised by Wall Street and the big 
banks of the country as a "promotion fund" to put the 
Central Bank scheme through Congress. 

He said that banks of Philadelphia were expected to 
supply or raise $100,000, or one-tenth of the amount, and 
were then engaged in doing so. A prominent Wall Street 
banker has admitted the raising of the fund, but claims it 
is only $500,000. 

No one acquainted with Mr. Barker and his high reputa- 
tion and unblemished character will for a moment doubt that 
he believed what he said and had ample evidence to prove its 
truth. And if it be true, it is a fact of grave significance. 
Everybody knows that Wall Street puts money into a mere 
gamble only on the basis of what it believes to be a 100 to i 
or 1,000 to I shot. That when it gambles with a million, it 
at Jeast thinks it has a cinch to win a hundred million or a 
billion. When the "special interests" put up in cold cash to 
promote just one bill through one Congress a greater sum 
than sometimes is required by all parties to conduct an 
entire national campaign throughout the whole United 
States, it is pertinent and wise for the people to ask what 
such "special interests" expect to make as the result of the 
passing of such bill, and who is to pay them their expected 
profit. What will Wall Street and the big banks gain if 
their conspiracy to "put over" a great private Central Bank 
is successful? 

180 



CORPORATE CURRENCY 



Big Banker — Corporations can not legally pay money (or 

"politicBil" purposes. So this $1,000,000 fund is BDbscribed to 
"educate" the people and to lobby the private central bank bill 
through Congresa. Why can't we use this money to "edueate" 
the people to nominate for the presidency and Congress in both 
parties candidates who secretly will pledge themselves to support 
ODT central bank acbemet 

Wall Street — Sure thingi "Educate," that's the proper 
word, pard. Havemeyer had the right idea. The sugar trust con- 
tributed to the democrats in democratic states, and to the repub- 
licans in republican states. In doubtful states it financed both 
parties. 

It's cheaper and much safer to buy a man before he is 
aominated or elected, or buy the party boss or machine that will 
control him. We mast stir up the tariff issue to divert public at- 
tention from our bank scheme. If we can keep those pesky pro- 
gressives divided between the two parties we always can elect 
the men we want. Barnum was right — the people want to be ham- 
bugeed ' 



i82 UNITED STATES MONEY vs. 

Former Secretary of the Treasury of the United States 
Leslie M, Shaw is reported to have publicly stated that "a 
private corporation could well afford to pay the entire debt 
of the United States, which on October 31, 191 1, amounted 
to nearly one billion dollars (or, to be exact, $963,349,390) 
for the power and opportunities for profit which the 
"Aldrich plan" for a great central bank would have Con- 
gress confer free upon just one private corporation, the 
National Reserve Association. 

If this be so, and in fact it is a very moderate estimate, 
"high finance" can well afford to put up $1,000,000 or 
$10,000,000, or even $100,000,000, to lobby the bill through 
Congress, and to bring about the nomination for President 
in 1912 a candidate of one or each party who will not veto 
the bill, and of congressmen and senators who will support 
the measure if it happens to fail in this Congress and must 
go over to the next. And "high finance" generally knows 
what it wants, the surest way to get it and is not stingy or 
slow about putting up any required amount of money needed 
when the game is big and the reward large and certain ; nor 
has it a burdensome and inconvenient excess of moral 
scruples to interfere with the spending of its "legitimate 
campaign fund" where and in ways to insure winning what 
it is after — not simply an election, but rich legislative, 
executive and judicial favors and immunities after election. 

With the giant trusts fighting for their very lives, and 
their officials to keep out of prison and demanding from 
Congress legislation to that end; with 235,000 miles of 
railroad dependent more or less for profits upon the will of 
an interstate commerce commission appointed by the Presi- 
dent ; with 24,392 banks and trust companies scattered over 
the country hoping that their power and profits soon will be 
vastly augmented by act of Congress; and with Wall Street 
organizing and financing a nation wide campaign to induce 
Congress to grant for fifty years to a private corporation it 
will manipulate a complete monopoly of the entire money 
supply of the people and power to rule the banks and 
through the banks the business of every individual and 
corporation, by inflating and contracting the supply of cur- 
rency and $15,000,000,000 of bank credit; the true friends 
of the people and of poular Government may well stand 
aghast with anxiety if not fear as the ravenous flock of 
financial vultures assembles above the campaign of 1912 
ready to devour the expected feast to follow. 



CORPORATE CURRENCY 183 

Unless conditions now apparent change or all signs fail, 
the national campaign of 1912 and the preliminary struggle 
for control of the nominating conventions, presidential and 
congressional, will be full of intrigue, secret deals, selfish 
compacts, unpatriotic, political and financial bargains, and 
the most venal and corrupt and degrading of all American 
history. It is an approaching climax. Will it destroy one 
or both of the great political parties? At last, will it break 
the corrupt and dominating small "balance of power" that 
so long has terrorized and controlled many of the acts and 
the destinies of both parties because, though small in num- 
bers, it has ruled by keeping the great majority, composed 
of patriotic citizens politically divided? Will it force a 
union somewhere of the unselfish, law-abiding and patriotic 
of all parties ? The present air is surcharged with potential 
possibilities likely to lead, under the unseen guidance of an 
all-wise and merciful Providence, to a grander republic and 
greater hope and happiness for the people. 

"High finance" cares little for the fate of parties or of 
statesmen after it has gotten away with the legislative 
spoils. As a certain insect invariably destroys its life in 
giving birth to its young, so Wall Street would gladly wel- 
come the political death of a President or a party first 
serving its purposes by giving birth and perpetual corporate 
life to its private central bank financial monstrosity. 

The "interests" consider this a republic in name only. 
They doubt the intelligence and capacity of the people to 
rule themselves. They hold that money should be master. 
And they own the money. Therefore, that from its throne 
in Wall Street the "special interests" as an imperious mon- 
arch must and shall rule the republic. 

They are mistaken! This is a republic in fact. The 
people can and will rule. Their wonderful patience spoken 
of by the immortal Lincoln that makes them conservative 
and cautious soon will be exhausted. Then their turn at 
the wheel of events will come. They have the power, for 
as yet the constitution and the laws have not been abol- 
ished, even if often they have been ignored. And these 
are effective instruments for the protection of the people 
and the execution of their will. 

Already there are laws prohibiting corporations using 
corporate funds for political purposes. Banks are corpora- 
tions. Such acts are ultra vires, beyond the corporate 
powers. There are criminal penalties. It is said to have 



i84 UNITED STATES MONEY vs. 

been reported at the recent American Bankers' Association 
meeting that that body last year spent about $200,000, much 
of it for missionary work, presmnably for a private central 
bank. Since the insurance investigation "yellow dog 
funds" have been under the ban of the law. Is the Albany 
"house of mirth" now to be moved to Washington? Are 
the banks of the country to join Wall Street in financing 
their corrupt and criminal orgies that will make the Albany 
exploits that so shocked the whole country mere Sunday- 
school picnics in comparison? We soon will know. 

But beware 1 The people sometime will have their "in- 
ning." There will follow public congressional investigation 
that will lay bare the entire conspiracy and every corrupt 
or criminal act, even if every denizen of Wall Street and 
every American banker is summoned and on oath forced to 
reveal to the committee or to a grand jury "the truth, the 
whole truth and nothing but the truth." It is passing 
strange what some big men will do for money — for a little 
more money that they do not need ! 

"Mene, mene, Tekel; Upharsin." (Daniel 5-25.) 



CHAPTER XI. 
WALL STREET STOCK "MARKET. 



»> 



A "Fixed" Monte Carlo. The Game in Detail Exposed. United 
States Attorney General's Strange Opinion. 

A banking or currency reform plan that does not take 
into account the constantly daily monetary, financial and 
banking practices of Wall Street will be ineffective and use- 
less. There conditions constantly prevail that decisively 
influence the supply and flow of currency and credit, the 
rates of interest on both time and call loans, the making and 
calling of bank loans in vast volume, the international ebb 
and flow of the tides of gold that now measure all values, 
and the quotation prices of twenty to thirty billion dollars 
of listed securities, a total three times the value of all annual 
crops of the soil and eight times all the money of the 
United States. ^ 

If these forces were moved only by natural causes — 
"natural supply and demand" — ^values would be relatively 
accurate and stable, fluctuations and changes comparatively 
moderate and harmless, monetary conditions would be 
sound and financial institutions safe ; and Wall Street as a 
barometer of the nation's prosperity and a "governor" on 
the financial engine moving the wheels of all American 
activities would be an accurate and useful indicator and 
regulator of steady and inestimable value to the entire 
country and all of its inhabitants. There would be no dan- 
gerous extremes and consequently no possibility of panics. 

But, unfortunately, in Wall Street everything is artificial. 

Nothing is natural or logical; therefore the unexpected 

always is happening. Every effect is the result of a planned 

and purposeful cause. Whatever is done usually was 

< intended, procyred. 

If prices soar to the swallows' nests, they were put up 
there. If they slump to the coal cellar, they were dumped 
there. And only the few big inside operators know which 
will be done on any particular day. Consequently every- 

185 



Tflll OF THE TRPE. 



FOUND IN EVERY WALL ST. BANK 



nuTHOR HAS n Piece of 'TicxeR " r/ipe 

SHOW I NO ■* £0,000,000 SHlUNK/lOe 

IN zo niNUTes in ths 'miiih(£t pma' 

OF THE "listed" STOCK OF ONE COnP/Hlli 
WHICH D/fOP HE saw THKE PUCE. 
THE LOSS RUINED THOUS/lhOS 

ano IT wffs n croohed dehl 



J 



CORPORATE CURRENCY 187 

body else in the United States who either speculates or in- 
vests in "listed" securities is merely gambling blindly, reck- 
lessly, without the slightest knowledge or chance of knowl- 
edge. A mere guess as to whether that day the masters 
of the machine will decide to lift the lever up or push it 
down. And he will not and can not know, or have the 
slightest idea or inkling until after, figuratively, he has 
dropped his money in the slot, made his bet, heard the 
whirl of the unseen wheel behind the impenetrable curtain, 
and the attendant, "the broker," opens the little peek-hole 
and, as usual, calls out : "You lose ! Try your luck again." 

The fact is the putting up or down of the price of a given 
stock or bond is simple and easy. The shares of the com- 
pany are limited. It is not like speculating in wheat or 
com against every bushel in the world. A large portion of 
a corporation's shares of stock never change hands, how- 
evermuch the price may fluctuate. The proportion of 
shares "on the market" usually is relatively small. It is 
only necessary to organize a syndicate or "pool" with suf- 
ficient available means or borrowing power to put up as a 
margin a sum equal to 10 per cent of the quotation price 
of whatever shares of that particular stock may be offered. 
Usually but 10 per cent to 25 per cent of the stock of the 
smallest or largest railroads or trusts will appear on the 
market, even if prices are forced far above conceded value. 
Most holders want steady investments, dividends, not to 
gamble on stimulated changes in prices. And the manipula- 
tors must furnish only 10 per cent of the value of the rela- 
tively small amount offered. Another 10 per cent is fur- 
nished by the brokers and the balance 80 per cent by 
the banks, loaned on the securities as collateral. Thus the 
banks are the chief factor in every stock-market manipula- 
tion. 

While the great Wall Street insurance companies, con- 
trolling in their reserves hundreds of millions of the ac- 
cumulated savings held for "the widows and orphans," are 
prohibited by layr from investing in stocks, the law does not 
say that they can not, to help out their stock-market mas- 
ters, deposit a hundred million of money in the banks and 
thus enable such banks during a great market manipulating 
campaign to loan to inside operators four hundred million 
dollars additional credit to aid them in running the gamble 
against the public, the living fathers, husbands and brothers 
of such future "widows and orphans." Whatever the 



i88 UNITED STATES MONEY vs. 

amount, they certainly deposit many millions in the big 
banks. 

Such a pool always is formed and operates in absolute 
secrecy. Often its members do not know the plays to be 
made from day to day with the common funds for mutual 
benefit. That is a "blind pool/' only the manager, usually 
one of the pool members, knows the moves made or to be 
made. A pool of that character has the price of that 
stock, the welfare of the corporation, its stockholders, offi- 
cers, employees, and the public absolutely at its mercy, and 
yet no one outside of the pool itself even can know of that 
fact. Sometimes it is a long, exhausting, wearing, heart- 
breaking, strangling struggle. Often it is just a quick, 
deep stab in the dark, always from behind, and all is over. 
The guilty never are caught or detected or even suspected, 
for the stock exchange is created and operates to hide the 
identity and completely screen the actions of the bandits of 
high finance. 

Very often the different pools manipulating the various 
stock and bond issues of the many trusts, railroads and 
other corporations quietly put their heads together and 
cooperate, or conspire. The whole list of price quotations 
goes up, a "bull" movement, or down, a "bear" movement, 
according as has been predetermined. The public that owns 
most of the securities but does not know until too late 
which way prices are to be put is, of course, always fleeced, 
the profits going to the insiders. In fact, it is the regular 
practice of the manipulators to put out hints and "tips" 
through the daily press and otherwise to cleverly induce 
the uninformed public always to take the wrong side of the 
market, and lose. Sometimes dividends are increased and 
decreased for the purpose of manipulating quotations for 
the speculative profit of "insiders." 

An honest, legitimate trading market for securities would 
be a useful national blessing. But the Wall Street Monte 
Carlo, in its practice and results, is the most colossal, 
crooked and financially dangerous den of gamblers and 
robbers the world ever has seen or dreamed of. 

Quotation prices sometimes are pushed up or down lo 
to 50 per cent. The overwhelming consequences of these 
fluctuations can be realized from the fact that an average 
fall of but 10 per cent means a total loss to holders of the 
nearly $30,000,000,000 of securities amounting to $3,000,- 
000,000, a sum exceeding all the money in actual circulation 



CORPORATE CURRENCY 189 

in the United States. A few such "swings" each year and 
the losses will equal eight or nine billion, the yearly value of 
all the crops. 

In this and other ways "high finance*' silently and con- 
stantly and irresistibly harvests an ever increasing portion 
of the fruits of all human toil and eifort. Yet the 
methods and means employed are so secret and mysterious, 
the victims may not even realize they have been intention- 
ally victimized, and never would suspect the right parties in 
any event. Indirectly most of the losses fall on the people 
who never buy stocks at all. 

It is "high finance" against people, with the cards always 
"stacked," the game always "fixed." It is hard for the 
people to figure out just how it is worked, but a large por- 
tion of the prevailing high prices is due to the machina- 
tions in one way or another of "high finance." The infla- 
tion of the volume of securities out of all proportion to 
assets, increase in interest rates on billions upon billions of 
dollars of municipal and corporation bonds and upon the 
loans of bank credit, are some of the agencies used, the 
extra burden falling always and only upon the people. 

Mr. Carnegie is said to own about $300,000,000 first 
mortgage bonds of the steel trust. Writer heard him tes- 
tify a few years ago before the House Ways and Means 
Committee to the effect that he refused to accept as a gift 
with his bonds an enormous quantity of steel trust common 
stock because it was all "water" and worthless. The issued 
common stock amounts to $508,302,500. Its market value 
now is about 70. If Carnegie told the truth, the stock is 
worthless today, except as unlawful use of the power of 
monopoly temporarily gives it a fictitious "earning power" 
that creates an illegal value by extorting illegal prices and 
profits from the public. But stock quotations do not de- 
pend upon or register intrinsic values. The will of the 
secret manipulating pools determines the quotation prices 
of listed securities. These pools can advance and maintain 
quotations far above values because they control the banks 
and can borrow as much as needed of the country's entire 
supply of money and credit, and they also can prevent the 
public, against which the pools are playing the game, from 
borrowing from the banks relatively a dollar of credit or 
money. 

"Money makes the mare go." This old saying is par- 
ticularly true in Wall Street. Those who control the cash 



I90 UNITED STATES MONEY vs. 

supply, rule and dominate eveiything else. A few men of 
giant wealth own a large share of the available cash. They 
put it in the banks and thereafter are masters of the banks ; 
for upon every million cash put into bank reserves, the 
banks build up and loan for interest profits four to ten 
millions of bank credit. The banks are at the mercy of 
and dependent upon the owners of the cash, because every 
million withdrawn forces contraction of bank loans four 
to ten millions. 

A financier with $10,000,000 cash can get the interest 
only on $10,000,000 if he loans or invests the money. But 
if he owns a bank and puts the $10,000,000 in its "cash 
reserve," the bank for his profit can, based thereon, increase 
its credit loans $40,000,000 to $100,000,000 without the 
investment of one additional dollar. 

The banks serve Wall Street and devote their limitless 
resources to further stock gambling (and 75 per cent of 
all stock exchange transactions are conceded to be fictitious 
gambling deals), for the reason that the owners of the 
cash, who are masters of the banks, and the organizers of 
the secret price-manipulating pools often are identical. And 
by a succession of consolidations, mergers, arrangements, 
"gentlemen's agreements," interrelationships, pools, and 
combines for mutual profit and advantage, practically all of 
the large banks, insurance and trust companies, containing 
the deposit savings of the people and the reserves of out- 
side banks and controlling all important loanable funds, 
together with the trusts, railroads and other large corpora- 
tions, generally have fallen under the absolute power of 
the same few Wall Street men, who are the big operators 
of the stock market, the masters of "high finance," the 
architects and beneficiaries of vast tidal-wave flotations, and 
the instigators and originators of the pending Private 
Central Bank plan, by which they expect to comer and con- 
trol and manipulate and turn to personal profit the entire 
public currency and all the revenues of the republic. 

The outside individual, whatever his wealth may be, who 
either invests or speculates in any stock or bond dealt in 
on the stock exchange, is blindly playing the game single- 
handed against the combined power of all these cooperating 
pools. And because of the control exercised by these pools 
over the financial institutions, and their ability to borrow 
without limit the money and credit of the Wall Street 
banks and the reserves of outside banks deposited in New 



i 



CORPORATE CURRENCY 191 

York banks, the outsider, to a large extent, is playing 
against the invincible power of the marshalled and intelli- 
gently manipulated combined banking capital of the entire 
United States. And if the Aldrich Central Bank plan is 
adopted, he must also play against the weight of the entire 
public currency and the total revenues of Ae Federal Gov- 
ernment, What chance has any individual outsider in such 
a game? 

The Central Bank "plan'* is a dazzling, daring scheme. 
If it succeeds, the Government, the people and the banks 
forever will be chained helpless to the Wall Street machine 
like the conquered and abject slaves to the wheels of the 
chariots of the returning and victorious Roman generals. 

Money is the supreme magnet. It is the sun that attracts 
and holds in place and regulates a universe of credit. 

The interest rate, like the moon, is a lesser magnet ; per- 
forming, however, an important office in the world of 
finance. 

It is unlawful in New York to charge more than 6 per 
cent on time loans. That would be usury. It once was the 
same as to "call loans." But years ago, "when the people 
were not looking," Wall Street stole up to Albany and had 
the law changed. Now it is lawful to demand the "pound 
of flesh," and to cut it out close to the heart, for any interest 
rate from i to i,ooo per cent may be agreed upon and 
enforced in the courts of "justice" of that state and in the 
federal courts respecting deals made in New York, provided 
the loan is always left payable "on demand." And in recent 
years it is a common thing to see interest on "call" loans 
bid up into the clouds — lo, 20, 50, 100, 200 per cent many 
times have been the ruling rates for call loans, and once, 
during the cornering of the stock of the Northern Pacific 
Railroad, and the resulting panic, the interest rate actually 
was run up on the New York Stock Exchange to 1,000 
per cent. 

It has been admitted that after the instigated broker.' 
have run the call loan rate up to ruinous figures, over and 
over big banks have called the loans of customers at one 
window for the sole purpose of forcing them to go to 
another window of the same bank, or to another of the 
co-operating banks, and submit to an interest extortion and 
robbery that would be a crime in another state and once was 
in New York. 

The great Empire State will not n.^ht this glaring and .mm 



192 UNITED STATES MONEY vs. 

growing wrong to the whole country. For about four rail- 
lion dollars annually in stock transfer fees, three-fourths of 
which is exclusively from mere gambling transactions, it 
has sold its independence and honor and licensed the 
gamblers to prey upon and plunder on its own soil the 
citizens of that state and the people of the whole United 
States. 

It is common knowledge that big Wall Street banks daily 
ignore and break both the spirit and plain letter of the 
National Banking Law, illegally loaning sirnis aggregating 
untold millions to further stock market operations of the 
Wall Street masters of such banks. "High finance" knows 
no law, human or divine. It is a bold and daring outlaw 
on the highway of commerce, making frequent raids to 
"hold up" honest business and plunder American prosperity. 

The practice of high interest extortion falls heavily upon 
legitimate business, for commerce and industry must com- 
pete with the gamblers for the banks' favors or get along 
without money or credit. This is because many banks ignore 
their obligations to the public whose deposits they use, and 
to the law to which they owe their existence, immunities, 
and special privileges. They are only "out for the coin,'' 
every last dollar, and they often auction off their "credit** 
to the highest bidder. And the gamblers can afford of 
course to outbid honest business. 

High interest on call loans is advertised in the daily press 
and made to entice away from outside banks their deposits 
and to induce country banks all over the land to deny the 
legitimate and necessary demands of local business that the 
funds of the institution 'may be sent hunting for usury in 
the deadly quicksands of Wall Street's great paradise of 
gamblers. 

And when this enticed money reaches the metropolis, call 
loan rates suddenly are put down to 2 per cent. By that 
time the fierce stock market struggle is over. The high 
rates demanded prevented the public borrowing so as to 
hold on to its securities until the artificially disturbed con- 
dition again becomes normal, the banks forcing the public to 
sell to insiders at bottom prices by "calling" the loans to 
secure which such securities are up as collateral. But the 
high rate as a magnet attracted into the reserves of Wall 
Street banks enough extra of the country's cash to enable 
such banks to loan hundreds of millions of additional bank 
credit to "insiders" to enable them to carry the securities 



CORPORATE CURRENCY 193 

the public thus was forced to sell cheap, until quotations 
can be manipulated and again marked up and the operators 
unload at a profit on the confiding public. And during 
these long periods of "rest," while the public is getting 
ready to "forgive and forget," the banks charge the "in- 
siders" on such call loans only the nominal rate of 2 per cent 
per annum, while everybody else must pay at least 6 per 
cent. In this way the monetary balances and currency 
streams of the whole country are altered and deranged, 
causing distressful and dangerous conditions tending toward 
panic. 

And the "interests" and the banks that repeatedly work 
these giant wrongs upon the country are the identical inter- 
ests upon whom the Aldrich plan would confer a thousand 
fold greater power for evil and unearned and unjust profits, 
by means of a great Private Central Bank under their 
control. 

The banks of the United States foolishly may be anxious 
to become the willing concubines of Wall Street in the mere 
hope of increasing their profits that they may wear finer 
clothes. But the business interests of the country depend 
constantly on the banks for an adequate supply of bank 
credit in order to make any money, or even keep their busi- 
ness alive. Surely they are not going to commit business 
and financial suicide by helping, to persuade Congress to 
create a Private Central Bank that in Wall Street's hands 
will enable it, by contracting the currency, to force the 
banks, even against their will, to call in and cancel bank 
loans to business borrowers, suddenly and unexpectedly to 
the extent of billions of dollars ! 

No important deal now can be financed in New York or 
in fact anywhere without the consent of the few ruling high 
financiers. Their consent usually can be obtained only by 
surrendering to them control and most of the profits of the 
enterprise. Many a deal is financially sandbagged because 
it does not first get the O. K. of the masters of finance; 
and no matter how attractive and sound it may be. All our 
banking laws play directly into the hands of these few men. 
They tend to force everybody in the United States to go to 
New York for money. This monopoly of American cash 
and credit by Wall Street is due chiefly and directly to the 
natural operation of federal laws pertaining to bank re- 
serves. These laws should be changed so that every city in 



194 UNITED STATES MONEY vs. 

the country will be on an equality with New York, with an 
equal chance for business- 
David H. Moffat, multimillionaire president of the great 
First National Bank of Denver, a man of character, in- 
tegrity and influence, recently died disappointed because for 
fifteen years and to the last the money-masters of Wall 
Street blocked in this country and Europe the sale of his 
gilt-edge bonds on the new railroad from Denver to Salt 
Lake that is half completed with money Moffat personally 
advanced. The road would open up a vast new territory 
that has no railroad, but between the terminal cities it would 
compete with the Union Pacific on the north and on the 
south with the Denver and Rio Grande, a railroad also 
built by Moffat. It is reported that the bankers who first 
considered financing the splendid independent electric rail- 
way scheme between Philadelphia and Atlantic City gave 
as a reason for dropping the project that they had been 
ordered to do so by financial interests behind the Pennsyl- 
vania Railroad, such interests intimating that if they went 
ahead every scheme they tried to put through in the future 
would be fought and blocked. The bankers said that it was 
one of the most sound and profitable deals they ever had 
considered but that they could not afford permanently to 
antagonize the powerful men behind the Pennsylvania Rail- 
road. So Wall Street has its "Black Hand.'' 

In 1908 writer suggested to the General Assembly of 
New York a legislative investigation of Wall Street and 
drafted the bill introduced for that purpose. He urged the 
plan at a public hearing in Albany at which John G. Milbum 
as counsel for the Stock Exchange publicly consented to 
such investigation. Evidently he was not serious, because 
agents of Wall Street blocked the measure notwithstanding 
Gov. Hughes twice urged its passage in special messages. 

Mr. Milbum said the members of the Stock Exchange 
were all honorable men, had nothing to hide. In reply 
writer read from the 1908 official report of the state com|>- 
troUer the direct charge that each year the members of the 
Stock Exchange swindle the state out of more than $2,- 
000,000 of stamp-transfer taxes on deals they do not report. 
As brokers always collect this tax from customers, instead 
of paying it themselves as was intended, it would appear 
that the offending brokers steal the $2,000,000 from either 
the state or their customers or both and pocket it. 

The Stock Exchange has 1,100 members. The franchise 



CORPORATE CURRENCY 



AKTif/c/Ai, usi/ALi.y MAunaieMr p/>/ccs ai.- 
WAYs ///o/cAre j^effei.y me trui orr/ts 
sec/fer »AWfii/tAn/*6 yvacs,* Aor w/Az/a/cimtfej. 



196 UNITED STATES MONEY vs. 

value of a "seat/' or membership, increased from $35,000 in 
1900 to $96,000 in 1909, a total value of $105,600,000 for 
the 1,100 "seats" and actual property, its building, worth 
perhaps $3,000,000. It is the right to participate in the rich 
fruits of the vast gambling operations that makes men pay 
^6,000 to join that "club. The rules allow the brokers to 
charge customers ^ per cent commission. In margin deals 
this IS figured on the 100 per cent face value of die stock 
bet on. It is ij4 P^^ cent on the actual cash involved, the 
10 per cent margin put up. And it costs another ij4 per 
cent to let go, to close a trade, 2j4 per cent for the "round 
trip." Brokers also can charge 6 per cent "interest" on the 
90 per cent of wind or imagination, the difference between 
ibe 10 per cent margin and the face value of the phantom 
stock. Figuring his margin money worth 6 per cent, cus- 
tomer pays 60 per cent "interest" on the actual money he 
puts into the deal. Broker will soon get all of his customer's 
money even if quotation prices remain the same. The 
interest, commissions and state tax speedily rob customer of 
all his cash. 

The Stock Exchange is not incorporated. It is an irre- 
sponsible, unregulated, unrestrained private clulx Yet its 
transactions total twenty to thirty billions annually, several 
times the value of all crops, and daily affect vitally all 
American life and business. No law of state or nation 
exercises the slightest eflFective public control over the ex- 
change, its members or their transactions, yet every panic 
was caused or intensified by this body and its dangerous 
manipulations. 

As the Stock Exchange regulates the state of New York 
and dictates its legislative policy, it is folly to expect that 
state effectively to regulate the exchange. 

Have we 48 little despotisms within the borders of the 
republic, each with supreme power permanently to inflict on 
the other states and the nation the grossest wrongs and most 
dangerous evils? Can one state that gets a big share of the 
profits forever maintain in spite of all the others the greatest 
gambling institution in the world and plunder the citizens 
of all states by crooked means out of more than a billion 
dollars every year? Is there no defense, no way of escape, 
for outraged people? 

Congress surely has power under the Constitution to 
regulate any exchange dealing in the securities of interstate 



CORPORATE CURRENCY 197 

railroads, and probably of any corporation engaged in inter- 
state commerce. 

It can and should prohibit margin gambling in the shares 
of such corporations because that practice interferes with 
their business and tends to increase their expenses and the 
rates they must charge. That margin gambling is the most 
dangerous panic-inciting practice is evidenced by the re- 
ported fact that during the panic of 1907 Morgan's first 
imperial order when he took command of the situation was, 
"Stop all margin trading!" He was obeyed, and instantly 
the strain relaxed and the danger grew less. If there was 
no margin gambling, there never would be any real panics. 
The gambling or fictitious deals, largely "wash sales," total 
between ten and twenty billion dollars every year. 

Congress at once should prohibit the pretended selling of 
shares of corporations engaged in interstate commerce that 
vendor does not own. This would abolish the 75 per cent 
of gambling deals without harm to legitimate business. It 
would make the exchange a genuine securities market 
instead of a gambling institution. Quotations then would 
be a true index of value. Severe criminal penalties for 
violators should be provided. Congress has power and 
should make it unlawful for national banks directly or indi- 
rectly to charge more than 6 per cent interest or discount 
on either call or time loans. This would force state legisla- 
tion imposing the same restriction on state banks, trust 
companies and individuals. Congress should also forbid any 
usurious loans being made on any such stock exchange. 

These two things would do much toward settling the 
monetary problem, increase the elasticity of the currency, 
and the volume of bank credit available for legitimate busi- 
ness, remove the cause of panics and save the people a 
billion dollars of losses annually. It would be the greatest 
blessing conferred on the country by any act of Congress 
in forty years. 

Evidently no help from the present administration can be 
expected. In an interview in the New York World May 27, 
1908, Attorney General Wickersham is reported as saying 
that margin trading, as carried on by the New York Stock 
Exchange, is perfectly legal and not gambling; He adds: 

"Actual deliveries of stock are made. It is not simply 
betting that a stock will go up or down. The men are 
actually buying and selling stock." 

As the Attorney General is an able hwyer, is reported as 



198 UNITED STATES MONEY vs. 

saying that he has been counsel for a very large number of 
the biggest financiers and interests in Wall Street, it seems 
impossible that he is ignorant of the fact that a large 
majority of the hundreds of thousands of people who play 
the stock game on margin never get or even see or expect to 
get one share of the stocks on the quotation prices of which 
they merely bet. The Attorney General as well might justify 
horse-race betting and claim that there is an actual delivery 
of horses to the bettors. There may be mentally, but not 
legally. 

Billions of dollars of "margin" deals are made every year 
in which the customers never receive into their possession a 
certificate for even one share of actual stock or have title to 
any stock legally transferred to them on the books of the 
several corporations, and no one knows better than the 
Attorney General that this is true. 

A wonderfully clever scheme has been evolved to confuse 
and hide the true character of margin deals. But everybody 
in Wall Street realizes that it is gambling and nothing more. 

To illustrate: In one day say a hundred purchases and 
sales on margin are made, each for i,ooo shares New York 
Central Railroad stock at par by loo brokers for loo cus- 
tomers, one deal each. The price of i,ooo shares at par 
($ioo) is $100,000. Each of the 100 buying customers puts 
up $10,000 as a 10 per cent "margin" with his broker, a 
total of $1,000,000 margin money in the hands of the 100 
brokers, or $10,000 apiece. Each broker goes on the floor 
of the exchange and "buys" the 1,000 shares, the transaction 
being entered on the exchange clearing-house sheet as a 
"purchase" by one and a "sale" by another broker. Stock 
never is delivered on the floor but at the broker's office bv 
messenger next morning. Each of the 100 bu)ang brokers 
"bought" in one deal and "sold" in another. At the end of 
the day in the clearing-house these deals are "matched" or 
ofiF-set. The whole hundred deals are settled by the last 
selling broker handing the first buying broker one certificate 
for 1,000 shares of that stock. 

A hundred "sales" of 1,000 shares each, total 100,000 
shares, worth $10,000,000, is settled by the delivery of one 
certificate for 1,000 shares in just one of the 100 deals, and 
$10,000 instead of $10,000,000 is all the money paid by the 
only one to whom any sort of actual delivery is made. The 
other 99 got no stock at all. . Yet behind each of the 99 
brokers is a customer betting that the price of New York 




IREASURir OCmRTMEPir 

WIIIIMUTON 

BtceKber 12, 19U« 



Mr. Alfred 0. Cresl«r, 
Plaaklnton House. 

lUlwaukee, Wisooaitln. 

Sir: 

2b reply to your letter of th» Uth last; you 
are •drlted that a table ahowiic the ;peroentege. of 
tanks TlolatlBft the law' in regard to real estate 
loans, reserre, exoessiTO loans and iMrrowed money , 
appears on psge S9 of the Conptroller's. report for 
this year , a oopy of which is being sailed to you » 
under separate ooTor, as requested. 

A oopy is also being sent to y. W, Crosier » o/» 
The Ronaine, Xlddleton Arenue (Tinoinnati , Ohio. 

Respectfully, 



Mptrty CoipptroUor* 



(See Page 283) 



CORPORATE CURRENCY 199 

Central will advance, ready to take his winning if it does, 
and with $10,000 up in the hands of the broker as a security 
wager to cover commissions and pay the "loss" to the cus- 
tomer behind some "selling" broker, who took the other side 
and bet that New York Central would go down. Neither 
wants to bother with any certificate of stock. The customer 
who "sold" had no actual stock to sell or deliver. The 
customer who "bought" got no stock and did not want any. 
Both are interested only in the shifting quotation figures on 
the blackboard or tape as the game goes on. If there was 
any sort of real delivery by the last to the first man, there 
certainly was none to the 99 between, not even mental 
delivery, for they did not expect or want any actual stock. 
Each just bet the price would advance. If these had been 
genuine sales, it would have required 100,000 shares and 
$10,000,000 money to make the deliveries. As it was a 
gamble, 1,000 shares was enough to make the sham "de- 
livery" for the whole 100 "deals" and $1,000,000 to protect 
the 100 brokers in case quotations happened to go down 
instead of up. But even the first buyer did not actually get 
any stock. The certificate never was legally transferred to 
him on the books of the company. There was no stock 
actually delivered to him. He never saw any stock, or 
expected to. His broker got the 1,000 share certificate. It 
was indorsed in blank and thus transferable by mere delivery 
to "bearer." Without any consent or action by the cus- 
tomer, the broker takes this certificate to his own bank and 
pledges it as collateral security for his own note for 
$80,000, or 80 per cent of its market value. If broker 
defaults, the bank hands the certificate to a different broker 
who sells same to anybody desiring, it. The bank pays itself 
and the expenses from the proceeds and gives the balance, 
if any, to the defaulting broker. 

Unless the legal title to the 1,000 shares vested in the 
customer, clearly there was no "delivery" and the deal was 
a mere gamble, a wager or bet on the quotation price, and 
as such illegal and a violation of the New York state consti- 
tution which prohibits gambling. 

On the other hand, if there was delivery, and title vested 
in the customer, then the broker has committed a felony 
and violated the statutes of New York by converting to his 
own use the property of another, pledging his customer's 
stock at the bank as security for his own personal debt 
Margin dealing in either case is an illegal, criminal pro- 



200 UNITED STATES MONEY vs. 

ceeding, and the distinguished and able Attorney General 
should know of that fact. If he does, why is he apologizing 
for what is conceded to be the greatest of the many Wall 
Street evils, defending the stock exchange in its lawless 
course ? 

In the above situation only i,ooo shares of actual stock 
worth $100,000 is involved, and yet $1,000,000 cash is up 
as a security wager with 100 brokers who charge their 
customers J^ per cent commission on $10,000,000 for "buy- 
ing" and anotfier }i per cent on $10,000,000 for "selling" 
and also 6 per cent "interest" on an imaginary $9,000,000 
while the deal is pending ; also the state transfer tax. And 
the Attorney General is said to see nothing improper in 
this proceeding. Likewise he seems to siee nothing im- 
proper in over half the national bankers violating the 
United States laws that he took an oath to enforce, for he 
takes no action in the matter. 

It is believed that in a United States Court money lost I 
in a margin deal can be recovered by the victim in a suit 
against the broker. This view should be tested in the 
courts. 

Congress is the only power that can throttle or curb this 
most deadly of Wall Street's instruments for the spoilation 
of all the people. If Congress had acted twenty-five years 
ago, more than 10 billion dollars of wealth now danger- 4 
ously concentrated would have remained scattered in the ] 
pockets of a large portion of the 94,000,000 pe(q>le of the 
United States, , 



CHAPTER XII. 
PANICS NATURAL OR ARTIFICIAL? 

Inside FacU About 1907 Panic 



The "Aldrich Plan" is loudly advertised as a sure "cure 
all" for every panic. The country needs a "preventive" 
rather than "cure." This can be provided only if we dis- 
cover* and disclose the cause or causes of these repeated 
calamities. Are. panics natural and therefore inevitable, or 
artificial, and for that reason unnecessary and avoidable? 
Do they just "happen" or are they "sent"? Are they the 
work of Providence or of Man? If panics are not a visita- 
tion of Divine Wrath, if they are man-made, who does it 
and for what reason? 

Investigation leads us first to ascertain where panics 
start. History and common knowledge answer as to that. 
It is conceded that every American panic began in Wall 
Street. Why? Are they accidental or incendiary? If ac- 
cidental, due to financial conditions likely to produce panic, 
we can avoid panics only by removing these panic-inciting 
conditions. To do that we must go where they exist, to 
Wall Street. We must learn why these conditions prevail, 
who creates them, and for what purpose. 

On the other hand, if panic is incendiary, deliberately 
started, we must find out just who does it, how it is done, 
and for what object or objects. This done, it will be rela- 
tively easy to find and apply an eflFective remedy. 

The first overt act at the beginning of every financial 
panic is the violent and sudden contraction of bank credit, 
the wholesale and imperative calling in of bank loans. This 
always will cause panic instantly. This panic-inciting step 
by the banks may be involuntary or voluntary. If deposits 
are withdrawn by depositors flirough fear or otherwise, 
cash reserves shrink and banks must contract loans about 
ten times such withdrawals. This is involuntary and not 
the fault of the banks. Big Business thus can force the 
banks to cause panic through violent contraction of bank 

201 



202 UNITED STATES MONEY vs. 

loans caused by the simultaneous withdrawal by the "inter- 
ests" of bank deposits in large volume. If panic results 
from unnecessary and general cooperative contraction of 
bank loans voluntarily done by the banks to put pressure 
upon business men generally for the purpose of inducing 
them to influence Congress to pass legislation beneficial to 
the banks, or for the purpose of steering the course of poli- 
tics and influencing a national or state election, it is a 
deliberate crime for which the banks and guilty bankers 
should be severely punished. 

In seeking to prove the guilt of a prisoner against whom 
there is circumstantial and no direct evidence, the first 
thing is to establish that the accused had a guilty motive, 
that he got some profit or advantage as the result of the 
crime committed. Circumstantial evidence often is as un- 
erring and convincing as direct, pointing irresistibly and 
logically to the guilty party. Many a man has been justly 
convicted and hung for murder exclusively on circumstan- 
tial proof. 

Once the prosecution conclusively shows that the accused 
benefited by the crime, the prisoner is more than half con- 
victed. Practically he must then prove an alibi or produce 
other evidence of innocence. 

By this legal standard let us test and judge Wall Street, 
accused and indicted as the criminal author of panics, and 
now arraigned on trial in the Court of Public Opinion. The 
specific count, under present consideration, is the one charg- 
ing that Wall Street caused the panic of 1907. 

Seeking a motive, let us first show what that panic 
accomplished and who profited thereby. 

The N. Y., N. H. & Hartford R. R. obtained control of 
the Portchester Railroad that soon would have been a com- 
pleted competing line between New York and Boston if the 
panic of 1907 had not forced the promoters to sell when 
banks and trust companies called their loans secured by 
Portchester R. R. securities. 

The Morse coastwise shipping trust that had become a 
serious and successful competitor of that same railroad by 
cheap water route was wrecked and ruined by such panic 
and sold out for a nominal price to interests said to be 
affiliated with that railroad. 

The Georgia Central R. R. had a similar experience with 
like results. 

Morse committed the unpardonable Wall Street sin of 



CORPORATE CURRENCY 203 

quietly buying up control on his own hook of a string of 
the smaller New York banks, with the alleged object of 
using their deposits and credit to manipulate his ice com- 
pany and other *^high finance" flotations. He had seen 
others do the same thing, men higher in finance than he, 
why should he not do it? He tried it, and was sentenced 
to serve a fifteen-year term in Atlanta prison. And the 
financial world now knows it is not wise for any individual 
to try to corral any New York banks and build up a 
financial power independent of certain well known "powers 
that be." 

Of course Morse broke the law and deserved his fate. 
But the woods are full of others guilty of all the same crimes 
— except the crime of trying to avoid "playing second- 
fiddle" to the great masters of Wall Street. 

For years the big trust companies of New .York paid 
higher interest rates for deposits than were paid by national 
banks. The trust companies, such as the Knickerbocker, 
the Lincoln, and the Trust Company of America, were 
state institutions and not subject to the reserve and other 
restrictions of the National Bank Act. Millions of dollars 
of deposits thus were enticed away from the banks and 
into the trust companies. These companies had many 
sources of profit denied to banks. They were rapidly 
growing large, rich and powerful. They were handling 
underwriting, financing many profitable flotations. They 
were largely owned and run by different men than those 
all powerful in the big banks. The banks increasingly be- 
came jealous, envious, sore at the trust companies. They 
would not allow trust companies to join the Clearing House, 
forcing each to clear its checks in the Clearing House every 
day through some bank member. But the trust companies 
refused to lower the rate enjoyed by depositors and their 
deposits kept climbing. All at once something happened, 
and "presto change !" The deposits of the trust companies 
shrunk and the deposits of the banks increased some fifty 
million dollars in a few days, or enough to decrease the 
credit loaning power of the trust companies and increase 
that of the banks more than a half billion dollars. What 
did it? Panic! The panic of October, 1907. How did 
it happen? Let us see. 

Times were fine. Prosperity was in the air, everywhere, 
business was expanding, demand increasing, prices high, 
profits big. Everybody was making money and happy. 



204 UNITED STATES MONEY vs. 

Factories were running full time or overtime. Everybody 
had a job at good wages. Surely the people had followed 
'Hhe pursuit of happiness/' had caught it, and all, men, 
women and children were enjoying it to the full. 

It is alleged that one night a quiet conference of some of 
the *'big ones" interested in the banks was held in New 
York to devise **ways and means." Writer has it on the 
word of the editor of one of the great New York dailies 
that late one night an official of one of the big financial 
institutions came personally to the newspaper offices with 
an article for publication, stating that a certain big bank, 
named, had decided to refuse to further clear for a certain 
big trust company, named, because it considered the trust 
company shaky and unsound. 

The news was sensational, and when published with big, 
black scare-head-lines, of course it frightened trust com- 
pany depositors into **runs" not only on that but on other 
trust companies. Most of the vast withdrawals went into 
the banks. Very grave and ugly charges against very 
high financiers and big banks have been privately made, 
and some things have become public. 

For instance, Oakleigh Thorne, president of the Trust 
Company of America, one of the large institutions made to 
grossly suffer, is reported to have publicly testified at the 
steel trust congressional hearing that the panic of 1907 was 
artificial, deliberately caused or stimulated, and named the 
high "interests" responsible. 

Wharton Barker, a very prominent, respected and wealthy 
retired banker and capitalist of Philadelphia, is reported 
as testifying in November, 191 1, at the hearing of the Sen- 
ate Interstate Commerce Committee that he had definite 
information and proof that the panic of 1907 was delib- 
erately planned in advance and purposely caused, naming 
the parties, the time and the place. 

The trust companies begged for mercy and help. "Mercy" 
is free, but "help" in Wall Street only comes in exchange 
for "quid pro quo." The runs continued, it is alleged, until 
control of part or all of the stock of big trust companies 
was surrendered to the powerful interests behind the big 
banks, and until the trust companies gave up possession of 
certain stocks held as collateral by the trust companies to 
secure large loans that the "runs" and the panic forced the 
trust companies to call in, then the runs are said to have 
stopped and the panic soon was over. 



CORPORATE CURRENCY 205 

It is alleged that control of the Tennessee Coal & Iron Co., 
the most powerful and dangerous competitor and rival of 
the steel trust, was obtained during the shuffle in the midst 
of the panic of 1907. 

Why should not Wall Street have panics once in a while 
when they shower upon the great masters of "high finance" 
so many rich and glorious blessings obtainable in no other 
way? And if Providence won't send a panic, why not 
make one, when it is so easy and will be so useful and 
profitable ? 

If insiders caused the panic, of course they knew when 
it would happen. Did they first "sell short" and thus reap 
the billions of dollars the public lost by shrinkage of quota- 
tion prices on the twenty to thirty billion dollars of listed 
securities ? 

Wall Street banks flatly repudiated their obligations dur- 
ing the panic, refusing to give up demand deposits com- 
prising cash reserves of banks all over the country, keeping 
the money so that they could supply cash or credit to the 
big operators who were buying at half their value securi- 
ties the panic forced the public to sell. "Possession is nine 
points of law," when it comes to money in a panic and the 
insiders need it. 

Panics often go further than intended, and may endanger 
even insiders ; 1907 did so. Even the big operators became 
frightened when the people kept withdrawing, hoarding 
and hiding deposits. They appealed to the Government to 
help the people by helping relieve and save the banks of 
the country. The Treasury responded by turning over 
about $120,000,000 of public moneys to the Wall Street 
banks. It is alleged that instead of properly helping coun- 
try banks by immediately releasing reserve money arbi- 
trarily and illegally detained, much of the Government's 
money was "salted" and kept by the Wall Street banks and 
their loans to insiders for stock speculations greatly 
increased. 

But the most important advantage expected to be derived 
by Wall Street and its banks from the panic of 1907, is a 
great privately qwned central bank — ^a huge private money 
trust to monopolize and forever control the entire public 
currency and the deposited revenues of the United States. 
The people always have been jealous of their money supply. 
They never have taken kindly to control of, the entire moncT 



2o6 UNITED STATES MONEY vs. 

tary circulation, the life-blood of all trade, by private parties 
for private profit. Nothing but extreme emergency and the 
most urgent necessity could possibly induce the people to 
consent to that course by Congress. As Wall Street was 
bound to get control of the public currency, what more 
natural thing than that it should cause a panic to inflict 
upon the people distressful conditions that comprise "ex- 
treme emergency" and thus induce them to consent to a 
private central bank and surrender to it of a billion of 
public currency as an "urgent necessity" and the only 
possible way of avoiding future panics? That's the big 
game! If the "interests" caused the panic of 1907, the chief 
object was to make it serve as an "object lesson" to the 
people and induce them blindly to drive Congress into grant- 
ing a private monopoly of the entire money supply of the 
people to a central bank corporation owned by banks con- 
trolled by Wall Street. 

And if it is necessary to have another panic as a new 
"object lesson" to pinch and drive the public into hurrying 
favorable congressional action on the "Aldrich plan," there 
is not the slightest doubt that Wall Street can cause it on 
short notice, and those who know or realize the daring and 
desperation of "high finance" and its determination to put 
the central bank through Congress at all hazard and what- 
ever the cost, do not doubt that it will cause another panic if 
necessary to force its will upon the country. 

For this reason business men no doubt will think it the 1 
part of wisdom not to expand but to keep near shore with j 
their financial sails snugly furled until Wall Street no longer 1 
has so much reason and temptation to start another panic. 
The panic of October, 1907, immediately preceded the 
introduction into Congress, in December, 1907, of a central 
bank bill based on the plan adopted by the New York 
Chamber of Commerce long before the panic or any public 
signs of panic were visible, the bill being practically identical 
with what now is called the "Aldrich plan." 

When the greatest of all Wall Street organizations, that 
combine of the brains and power of the financial metropolis, 
the New York Chamber of Commerce, formulated its 
demand in 1906 for a central bank, it was not to "stop" or 
"cure" a panic. There was then no panic in sight and no 
natural conditions to cause one. Was the panic later worked 
up and staged after the insiders had put their own financial 



CORPORATE CURRENCY 207 

house in order and just before the session of Congress in 
which the central bank bill actually was first introduced, in 
December, 1907 ? Right after the panic, in November, 1907, 
and just before Congress convened in December, 1907, a 
meeting was held in Philadelphia at which prominent Wall 
Street bankers urged Congress to authorize a gpreat private 
central bank as the only cure for panics. 

Was the panic of 1893 also deliberately caused by the 
same interests to help induce Congress to repeal the Sher- 
man silver purchasing act and adopt a gold standard, as 
has been charged? 

Was the panic of 1873 ^'so artificial, caused to compel 
Congress to pass measures for resumption of specie pay- 
ments and destruction of the "greenbacks," that they might 
be replaced by bank note currency yielding regular profits 
to the banks, as demanded by Wall Street ? 

Was the panic before the Civil War deliberately caused 
by high finance in its fierce struggle with President Andrew 
Jackson over the private central bank of that day? 

As each panic in history was coincident with some great 
contemplated raid by Wall Street upon Congress to obtain 
legislative privileges and special advantages of priceless 
value and limitless power, is not panic, planned panic, the 
one great, invincible and final instrument of torture applied 
on great occasions by Wall Street to the country in its 
continuous campaign of conquest? 

In a later chapter inside facts about the bank-made panic 
of 1893 are given. Panics cause privation, poverty, sor- 
row, suffering, bankruptcy, embezzlement, larceny, suicide 
and murder. Everybody knows this fact. Therefore, any 
man deliberately co-operating in acts that he knows will 
or may cause panic is both morally and legally guilty of 
causing every crime induced by such panic. If all or any 
one of past panics was deliberately caused or intensified by 
Wall Street interests, the most important work ahead for 
the people of the United States is to either shackle or ex- 
termmate the bandits of "high finance." The "Aldrich Plan" 
would give such bandits power for fifty years to shackle 
the people and exterminate their business and prosperity. 
It gjrants to them by act of Congress a hunger hold over 
the people, their business and welfare, that in eflFect will 
enable the soulless incorporated money power to establish 
in this country a condition of human slavery as real and 



208 UNITED STATES MONEY vs. 

more terrible and merciless than the black slavery abolished 
by Lincoln after the sacrifice of about a million lives; but 
instead of enslaving a few million negroes, this may plunge 
permanently into direct or indirect bondage the larger por- 
tion of the 94,000,000 inhabitants of the United States, 
white and black. 



CHAPTER XIII. 
MONEY IS THE POWER. 

Seereto of High Hnanc^ EzposedL Steel Trust's $75,000,000 Cash. 
The Real Money Trust, Heart of the Trust Problenou 

"We, the United States Steel Corporation, keep about 
$75,000,000 on deposit in the banks of the country, which 
we can shift about where it is needed by our business." 

The above is from the published report of the testimony 
of Judge Elbert H. Gary, executive head of the Steel Trust 
before the Senate; Committee on Interstate Commerce in 
Washington on December 7, 191 1. 

Without intending hereby to make any specific charges 
against Judge Gary or that corporation, we hope to evolve 
a short, useful hypothetical sermon with the above quota- 
tion for a text. Readers may draw their own moral con- 
clusions. 

At times, say before dividend periods, no doubt this cash 
fund is much greater, perhaps double, $150,000,000 or 
more. 

Remember, this is not "bank credit," or "deposits" merely 
oflFsetting "loans." It is cold cash. As such, when depos- 
ited, it instantly becomes part of the cash reserves of the 
favored banks. Such banks under the law, on the aver- 
age, are permitted to inflate their ordinary loans of "credit" 
an amount aggregating about ten times such increase in 
cash reserves. 

In "reserve cities*' banks must keep a cash reserve on 
hand equal to 25 per cent of their "deposits"; in other 
places 15 per cent. But three-fifths of the 15 per cent can 
be kept in reserve city banks and therefore is twice used 
as the basis of credit loans. This is the reason the volume 
of loans of all the banks happens to aggregate at least ten 
times the total money in their cash reserves. Ninety per cent 
of all bank deposits are mere checks or discounted notes, not 
actual money. 

In other words, the Steel Trust, by depositing seventy- 

209 



2IO UNITED STATES MONEY vs. 

five million dollars cash in banks, substantially enables 
such banks immediately to swell their loans of "credit," and 
to collect interest on about three-quarters of a billion dol- 
lars extra without investment by the banks of one addi- 
tional dollar. 

Likewise, if the Steel Trust suddenly should withdraw 
the $75,000,000 from the banks it would force such banks 
immediately to contract their total "loans" three-fourths of 
a billion dollars — that is, require borrowers from banks to 
pay up loans aggregating $750,000,000— and the banks 
would lose the chance to get 6 per cent per annum, or other 
going rate on that vast sum« ' 

There will be some reduction of these figures (not more 
than say 25 per cent^ if the money should be deposited in 
banks in "reserve cities" where a cash reserve equal to 
25 per cent of total deposits is required. These figures in 
relative proportion and size are substantially correct, but 
any ultra-captious critic is welcome to reduce the figures 50 
per cent and still we will have the same grave dangers modi- 
fied slightly only in degree. 

Bank Inflation and Huge Profits. 

According to the United States comptroller's report of 
December 4, 191 1, the 24,392 reporting national and state 
banks and trust companies of the United States on June 7, 
191 1, all combined owned and possessed just $1,554,147,- 
169.28 of money, in round figures a billion and a half in 
cash. With only this amount of cash in their reserves to 
use for all purposes the banks and trust companies have 
piled up liabilities that total the enormous sum of $23,- 
631,083,382.67, more than twenty-three and one-half billions 
of dollars, the larger portion of which represents loans of 
credit, on which they get regular interest and which costs 
the banks relatively nothing. It is similar to getting pay 
for indorsing another man's note. In other words, they 
have fifteen times more liabilities than cash. 

All that a bank really owns net is its capital, surplus and 
undivided profits. The balance of its assets merely repre- 
sent and oflfset its debts or liabilities made in buying such 
extra assets. So to be fair, we should take the combined 
capital stock, $1,952411,085.56, and the combined surplus 
and undivided profits, $2,065,574,839.70, add them and we 
find all banks and trust companies have combined net assets 
amounting to $4,017,985,925.26, a little over four billion 



CORPORATE CURRENCY 211 



CASH CONWOLS CREDIT 




USSTSei T/^UST^*7S,000,000 CASH 
D£POS/reD /N BANHS wcRe/ises 
tMNWC POIVeD OF S/INHS*/SaOO0,O0OI 



212 UNITED STATES MONEY vs. 

dollars. And over half of this is excess profits earned over 
and above profits paid out as dividends. 

According to the United States comptroller's said report, 
the total net earnings of all the national banks in 42 years 
is $3,107,185,441 ; practically equal to the $3,214,000,000 
that represents the total money in circulation, all the gold 
and currency of the United States in the hands of the 
people, banks and federal treasury. And such national 
banks have actually paid out as dividends $2,236,815,679. 
While some national banks earn 20, 30, 50 and even 100 
per cent, the average earnings of all, last year, exceeded 
15 per cent on their capital stock, and their dividends aver- 
aged 11.38 per cent. And yet they are not satisfied and 
now seek to have Congress vastly increase their profits by 
law. 

In 1907 there were only 418,057 stockholders of national 
banks, including duplications. So most of the vast profits 
go to a few persons. The bulk of the profit was made by 
relatively few of these stockholders and in recent years, be- 
cause while now there are 7,331 national banks, more thin 
half of them were organized since 1900; and since that 
date 3,086 small banks with average capital of $26,060 
and aggregate capital of $80,425,500 have been organized. 
Just one New York bank. The National City Bank, has 
$25,000,000 capital and $27,733,860 surplus and undivided 
profits, total $52,733,860; and under the Aldrich plan this 
one Wall Street bank will own nearly one-third as much 
National Reserve Association stock as these entire 3,086 
(of the total 7,331) national banks scattered in every state. 

Returning now to the summary of all banks and trust 
companies, deduct $4,017,985,925.26, their combined net as- 
sets (capital, surplus and undivided profits) from their $23,- 
631,083,382.67 of total liabilities and we have $19,613,097,- 
457.41 as the total amount they owe in excess of what they 
own net. And this nineteen and one-half billion dollars of 
excess liabilities is twelve and one-half times as much as 
the billion and one-half cash they possess. So the basis 
herein used of ten times as much credit liabilities as they 
have in cash was far below the average. And these figures 
are from the official Government report available with- 
out cost for everyone on request to the United States Comp- 
troller of the Currency, Washington, D. C, his December 
4, 191 1, report, or through a congressman or senator. 

This inflation of credit out of all proportion to cash re- 



CORPORATE CURRENCY 213 

serves is the danger point in the banking system. It has 
been getting worse and worse, banks taking greater chances 
grabbing for more profits. Banks loan their credit usually 
for thirty, sixty or ninety days, and can not require payment 
until the time matures and the discounted note falls due. 
Usually banks do not loan actual money. They give bor- 
rower a bank book with the proceeds of the discounted note 
entered therein as a checkable credit He then is a "depos- 
itor" and his "credit" is payable "on demand" and can all be 
at once checked out. This seldom is done and the bank 
profits accordingly. But to be in debt $19,000,000,000 or 
even $15,000,000,000, most of it in shape of credit "depos- 
its" payable "on demand," and to have all combined only 
$1,500,000,000 cash to pay with if the avalanche starts, 
would get on the nerves of an ordinary mortal. 

Whether the fact that most of the money belongs to and 
is risked by the stockholders and the people, and relatively 
little by the men actually managing the institutions on sal- 
aries and sometimes "indirect*' profits, acts as a nerve tonic, 
and perhaps often as a daring narcotic, bankers can best 
answer. 

It is a serious defect in a banking system that puts most 
of the power and profits in the hands of those who will 
lose the least by any calamity. The people who have de- 
posited actual cash savings and business men whose loans 
unexpectedly are called in are the greatest sufferers when 
panic occurs. The banker can get "his" out quick, if he has 
any in. To borrowers he can shrug his shoulders and say, 
"Very sorry, sir, but the panic is tihe work of Providence. 
Business is business. Go sell your property for any price 
you can get. We must have our money." The bank loaned 
the business man $10,000 credit and no cash. He sent 
checks right and left to pay bills for goods in stock and 
unsold. Now the bank instead of renewing as expected, 
demands $10,000 in actual money to settle a debt that was 
for credit. And at a time when two or three dollars of 
property must be sold to get one dollar of cash. And the 
humble depositor whose deposit was not credit but actual 
cash may be told that he must wait for his money, perhaps 
thirty days, and take the intervening risks. In the 1907 
panic most big banks were legally insolvent, refused to pay 
deposits in cash, repudiated. They were saved only by 
the patience and good nature of the people. And now, in 
return, they swell up with lordly air and join Wall Street 



UNITED STATES MONEY i 



BIG BANKER. 



RE7UPNS £y/L «* GOOD. 



This banker bbpudiated daring the 1907 Psuic. His bank beeuw 
legally insolvent by refariog to pay in cash on request its demand 
ouigations. Only the patience and generosity of its depooiton— 
the people — aaved it from permanent bankrnptoy and r~~ 

'" ""' "* big banl 

nnspiracy to rob the people and their government of *11 
n— ..».,o».^ anj volume of the public cnrreney for flftj 



CORPORATE CURRENCY 215 

in a conspiracy to take away from the people and the Gov- 
ernment for nothing, just appropriate by act of Congress, 
$1,000,000,000 of public currency, money, to put in their 
vaults as "cash reserves" to enable banks to increase their 
loans and make the people pay regular interest on $10,000,- 
000,000 more credit that they might not need if the banks 
would allow Congress to increase Government currency so 
more business could be done on a cash basis. 

Owners of Cash Rule All Banks. 

Returning now to the steel trusts $75,000,000,000 of cash. 
If the banks had made the $750,000,000 of extra loans, 
based on this $75,000,000 of money, payable in say thirty, 
sixty or ninety days, and the steel trust suddenly should 
exercise its legal rights by demanding immediate payment 
in money of its $75,000,000 of cash deposits that are pay- 
able "on demand," the banks might be utterly helpless and 
fail and close their doors unless they could get other banks 
to come to their rescue and save them from ruin. And a 
bank thus asking for help to save its life often must give 
control of its stock to the interests furnishing such "help." 

And if the banks thus were forced to close and liquidate, 
the losses to small depositors who had put in actual cash 
savings and had no timely warning would be a real calamity. 

Take a single country bank for example — ^say its capital 
stock and surplus (all that it really owns net) is $200,000, 
its total "deposits" say $2,000,000, 10 per cent "cash de- 
posits" and 90 per cent "credit deposits." Suppose a man 
should deposit $200,000 additional cash in that bank. Per- 
haps he would be paid interest thereon at 2 per cent or 4 
per cent per annum. The bank could, based on such $200,- 
000 cash deposit, swell its loans of "credit," and its nominal 
'^deposits" two million ($2,000,000) dollars, making its 
totsJs "loans" and "deposits" $4,000,000. On such extra 
$2,000,000 of loans it would collect interest at perhaps 5 
per cent or 6 per cent per annum. The $200,000 cash de- 
posit enables the bank practically to double its "loans," its 
"deposits" and its income. And obviously the owner of that 
$200,000 has power any time simply by withdrawing the 
money to decrease the total "loans" and "deposits" of the 
bank one-half, or $2,000,000, and to take away at least 50 
per cent of the earning power of such bank. These figures 
are strictly accurate, and will be varied only in localities 



2i6 UNITED STATES MONEY vs. 

or in degree, according as a bank may keep relatively a 
greater or less cash reserve. 

The $75,ooo>ooo cash divided and deposited in the 3,086 
smaller banks that have $80425,500 aggregate capital would 
practically double the loaning power and profits of them 
all. This accomplished, and the aggregate loans of such 
banks expanded say $750,000,000, put out for thirty, sixty 
and ninety days, every bank would be in the absolute power 
of the owner of that $75,000,000 cash on deposit payable 
on demand. Is there any action political or otherwise in 
any or all of those 3,086 cities and hamlets in every part of 
the country that the owner of that $75,000,000 could not 
get for the mere asking? Could there be a greater or more 
dangerous political machine? It is the power to control 
the actual cash that is the evil, the danger. 

Suppose, now, that the real object in depositing that 
$200,000 cash in that bank was ultimately to acquire actual 
ownership of a majority of the shares of the capital stock 
of such bank — say $101,000 thereof. How could the bank 
safely refuse to induce its stockholders to part with 51 per 
cent of their stock holdings, even if the price offered was 
low, if the alternative was the possible sudden withdrawal 
of the $200,000 cash deposit and forced contraction of loans 
$2,000,000, and possibly the closing of the banks* doors 
because it might be unable to collect in its loans fast enough? 
Often in such cases no threat or demand for stock con- 
trol is necessary. The mere intimation that "tomorrow" 
the owner probably will withdraw the $200,000, "because 
he will need it to invest in some securities" he thinks (tf 
buying, is sufficient to make the bank suggest and finally to 
beg that he invest in the stock of such bank, instead of 
something else, which he permits himself to be "per- 
suaded" to do in case enough stock to control the bank is 
turned over to him. And of course he gets control. 

Control of more than one great financial institution in 
New York City and elsewhere, containing millions upon 
millions of the deposit savings of the people have been 
obtained by big business in this or other questionable 
ways, or in the midst of "runs" or "panics" deliberately 
caused or stimulated by "high finance" adventures for sinis- 
ter purposes. 

Again, suppose what the owner of this $200,000 rapid 
fire cash gun is "gunning for" is control of some big local 
industry, situated in the small town where such bank is 



CORPORATE CURRENCY 217 

located, such industry being a successful and troublesome 
eompetitor of a big trust. It is easily discovered that the 
industry is a large borrower at the local bank, necessarily 
so at times to carry an adequate supply of suitable raw 
materials and large quantities of finished product up to 
marketing time, and the accounts of customers until due. 

Gradually and secretly the net is spread. The $200,ooa 
is deposited in the bank, not by the trust, but in the name 
of some individual or several persons. The bank is thus 
encouraged to expand the volume of its loans. The indus- 
try in question being perfectly solvent and sound is per- 
suaded by the bank to borrow greater sums, which it does 
to effect a saving by larger purchases of raw materials. 

All now is ready. The trap is sprung. The money sud- 
denly or gradually is withdrawn from the bank under one 
pretext or another. The bank hastily presses for the re- 
payment of its loans. The local industry is importuned ta 
help. It turns over its cash balance. It crowds its cus- 
tomers, urging, begging, demanding payment. These pro- 
ceeds are handed over to the bank. But the amount rela- 
tively is insignificant. The bank demands, even threatens. 
It can do nothing else, and comply with the cash reserve 
law. The industry slaughters prices and sells large quan- 
tities of its products at a loss. It reduces expenses by 
"laying off" large numbers of its workmen, although the 
market demand would justify an increase rather than de- 
crease of output. It discharges some of its office help and 
traveling men, and even reduces the salaries of its officers 
and managers. Every dollar the bank insists on having, for 
a bank in distress usually thinks only of itself. 

All this is done quietly, even secretly, the public knows 
nothing of it. If it did, local depositors might take alarm,, 
withdraw more deposits and increase the peril of the bank. 
There is no "panic," no "hard times ;" in fact there is gen- 
eral prosperity. This transaction has nothing to do with 
"general conditions." It is just a quiet little game of 
"freeze-out" and the bank and the industry do not even 
know they are sitting in a "game." They think "Provi- 
dence" is the architect of their misfortunes. Superstitiously, 
they consider themselves the victims of fate. 

But the trust and the manipulatdrs of that $200,000 know 
differently. 

At the ''psychological moment," the darkest hour, some 
«tirely different party just Casually "happens" to ask one 



2i8 UNITED STATES MONEY vs. 

of the officers of the industry if any of its capital stock is 
for sale, or could be bought at a reasonable price. Or per- 
haps the inquiry is made of the distressed local banker. 

Wonder of wonders! The miracle of the ravens drop- 
ping manna from the sky to save the life of the famishing 
prophet of old lost in the wilderness was nothing compared 
with this modem miracle. 

A chance to sell out for real money, and the buyer does 
not even know the financial hole the industry is in ! 

The rest is simple and easy. The bank, for its own bene- 
fit, helps induce the stockholders of the industry to accept 
a low price and part with control or all of the -stock. And 
lo and behold ! The bank is saved, the former owners of 
the industry fleeced or ruined, and another competitor has 
been "benevolently assassinated" by the trust in the interest 
of "co-operation" and "the logical and inevitable develop- 
ment of natural and immutable economic laws!" 

Bosh! It was just a common, low-down btmco game. 
And the present banking methods, and control and use by 
the selfish few of a dangerous quantity of the actual money 
of the country, were the agencies employed. Or, more 
likely, the pinched and terrified officers of the local indus- 
try, perhaps under pressure from the bank, themselves rush 
to the trust with an offer to sell out, and the trust kindly 
consents to buy, of course, *'against its interest and de- 
sire," solely for the benefit of suffering humanity and to 
prevent the possible spread of public fear and alarm that 
might perhaps cause failures and general panic, or what 
not. Oh, fiddlesticks ! 

The real trust problem is not merely high prices and a 
way to lower them a little, but it is to regulate or destroy 
trust power over money and banks and railroads and poli- 
tics, that deadly conspiracy of all the interests of Wall 
Street for mutual power and profit. If we must have 
monopolies the law should effectively and permanently de- 
prive and take away from such corporations every extra 
profit, power and advantage obtained by use of the power 
conferred by monopoly. And should not all excess profits 
due to monopoly be confiscated by law and be returned to 
the people through the Federal Treasury ? 

Oince more, suppose the owner of the $200,000 wanted 
to borrow, say $2,000,000 for himself and associates in some 
stock market "secret pool,"' organized like the "Hocking 
Railroad Pool," to manipulate up and down 50 per cent 



CORPORATE CURRENCY 219- 

the entire stock of some particular corporation. Say, arti- 
ficially to force the stock up to twice its value, unload at 
the top and after "selling short," knock the props from 
under the market by withdrawing "pool support,'* profiting 
again by letting the quotation prices go to smash, the public 
as usual being caught both ways and left to "hold the bag." 

He proceeds by putting the $200,000 cash in the bank. 
The bank under the law then can increase its "loans" about 
two million dollars. The man is to get the backing of the 
bank, and the use of its "credit" in the shape of ordinary 
"loans" for $2,000,000, in his stock market campaign, and 
the bank will get 6 per cent, or perhaps only 2 per cent,, 
on $2,000,000 of extra "loans," less say 2 per cent or 4 per 
cent the bank will pay on the $200,000 cash deposit. No 
doubt the man and the bank between them can devise a way 
to get the entire $2,000,000 into the hands of the "pool" by 
loans to various of its members, or to their office boys or 
colored porters as "dummies," or otherwise. For there 
are forty ways to "skin a skunk" when black fur brings 
high enough prices. 

The utter fallacy of the old saying, "A man cannot lift 
himself over the fence by his own bootstraps," may begin^ 
to dawn upon the reader as we study the bank methods 
of inflation of "credit," — or financial wind. "Wind" is- 
cheaper than "water," so banks just pump "wind" into^ 
their holdings. And the secret of the enormous profits and' 
rapid rise in stock value enjoyed by many banks now can 
be better understood. 

If all this could be accomplished, or only a fraction of 
these things, by use of a paltry $200,000 of cash, what is. 
impossible to those possessing $75,000,000 or perhaps $750,- 
000,000 of actual money ever ready for instant use, and 
which can be "shifted about to further their business." 

We are not saying the trust would do it. Our present 
purpose is to show the power to do so. The people must 
judge as to the safety or danger of lodging such unlimited,, 
unrestrained and unregulated power in private hands. 

Is it not mere child's play to put the quotation price of 
the $508,302,500 of steel trust common stock up to 70, or 
any other price, so long as the trust with its $75,000,000 
cash can increase the loaning power of the banks enough 
to supply sufficient credit to the pool sustaining that stock 
to buy every share in existence ? What chance has any oner 
trying to "buck" such an omnipotent financial power ? 



aao UNITED STATES MONEY vs. 

Power of the Money Combine* 

So far we have shown but a fraction of the evH, the 
danger. We must multiply the $75,000,000 of the steel 
trust by the cash controlled by every trust, railroad, insur- 
ance company, bank, trust company or other corporation 
directly or indirectly dominated by the small group of men 
in Wall Street, who usually act as a unit for mutual profit 
and private advantage. 

The Northern Pacific Railroad alone has over $60,000,- 
000 cash or cash assets, the Tobacco Trust $20,000,000, Ex- 
press companies $70,000,000, or nearly as much as the Steel 
Trust, and every other system a greater or less sum. Three 
of the many Wall Street banks have on hand nearly $300,- 
000,000 of actual cash. They have three-fourths of a 
billion dollars of resources. And they control directly or 
indirectly other banks with vastly greater resources. 

The Standard Oil interests are said to directly or indi- 
rectly control many times as much ready cash as the $75,- 
000,000 of the Steel Trust. And two or three Wall Street 
firms are believed to be in position to command when 
needed, to be "shifted about to further the business" of the 
money combine, unlimited portions of the billions of dol- 
lars of ready wealth said to be owned by the four European 
branches of the great banking Rothschild family, and other 
individual and corporate foreign capital in unlimited 
amounts. 

Those who control the depositing and disposition of the 
vast cash funds of corporations have within their reach 
rich and sure opportunities for personal profit. They are 
in position often to swap favors with the banks. It is not 
their own money, but that makes no diflference. Money 
is power, and control of large money is both power and 
opportunity. 

Directly or indirectly, this one financial Wall Street 
group is believed thus absolutely to control much more 
than half and perhaps a sum equal to all, of the $1,500,- 
000,000 comprising the total cash reserves of all of the 
24,392 banks and trust companies of the United States. If 
this be true, that group has power, simply by withdrawing 
this money from banks, to easily and quickly force the 
financial institutions to contract by calling in and canceling 
more than one-half if not all of their entire $15,000,000,000 
or more of outstanding loans. By thus extinguishing or 



CORPORATE CURRENCY a2X 

forcing the banlcs to require the repayment of at least 
$8,ooo,ooo;ooo of bank loans made to industrial, mercan- 
tile, commercial and other business borrowers, an amount 
nearly three times the total of all money actually in circula- 
tion in this country, those few men could if they would 
thus deprive the financial institutions of at least half if not 
all of their entire gross income, plunge such institutions 
into grave peril if not into bankruptcy, cripple if not ruin 
a large per cent of active business men and corporations, 
close factories, mills and mines wholesale, cramp the opera- 
tions of agriculture, drive millions of toilers into idleness 
and their helpless dependents into distress and poverty, and 
in fact to easily inaugurate the greatest and most devastat- 
iner financial and industrial panic in the world's history. 

These few men possess absolutely the power of life and 
death over every bank and through the banks over the busi- 
ness of every individual and corporation in the United 
States, because they control the money, the life blood of all 
business and the source of the credit oxygen necessary to 
the lungs of commerce to sustain its life and vitality. If 
the country enjoys prosperity, it is because these few men 
grant it and have loosened their purse strings. If the Re- 
public is plunged into the horrors of panic it is because 
these few men so willed and have locked their guarded 
steel vaults with much of the needed cash of the nation on 
the inside. 

Think of the nation-wide and powerful political machine 
this creates ! Wall Street turns the switch and the current, 
its order, flashes over the wires to a distant bank. The bank 
tightens the screws on its customers by calling loans or 
threatening to do so, of course "as a matter of prudence for 
the safety of the bank, made necessary by fear of a possible 
panic if Congress does not quickly pass the Aldrich plan/* 
etc., etc. Thus the bank's customers, all influential constitu- 
ents of the local congressman, are "sicked onto" the repre- 
sentative and the senators until they are made to believe 
that the measure is popular and a great public necessity, 
and against their better judgment reluctantly they join 
those supporting the scheme in Congress. Wall Street from 
the first realized that its only possible chance of passing 
the bill was to so tempt and enlist or coerce the banks of 
the country that they would go to the limit in helping to 
force the congressmen of lx)th parties to support the 
measure as "a non-partisan affair" under pressure of con- 



222 UNITED STATES MONEY vs. 

stituents inspired to action by the local banks. It has been 
-charged that the panic of 1893, which also came suddenly in 
the midst of general prosperity, was largely caused or accel- 
erated in just this way, the object being to stop the Govern- 
ment issuing more silver money in particular and more 
money of any kind in general, because the banks desired for 
profit to supply all of the money as well as the credit that 
the people use. 

There are, as we have seen, different and equally effective 
ways to control a bank and its actions other than by own- 
ing a majority of its capital stock. And also to control the 
making of its loans and the purchasing of securities and even 
the political actions of its officers, directors and customers. 
It has been said that interests friendly or affiliated with 
Standard Oil long maintained a cash deposit sufficient to 
increase by over $1,000,000 the loaning power of a certain 
financial institution outside of New York City of which in- 
stitution a well known and very high public official is an 
officer. How could that public servant oppose the **spe- 
-cial interests" even under his oath of office? 

As the curtain now is drawn back, we behold the majestic 
and imperial power of Wall Street, and the easy and in- 
vincible methods of employing that power for the ever in- 
creasing enrichment of the few at the expense of the many 
by the great Masters of Finance! We discover just how 
the rapid concentration of banking capital and control and 
the consolidation of industries and railroads can be forced. 
We find the banking system willing or unwilling slaves 
chained to the wheels of the Wall Street machine, helpless 
to resist and afraid to protest. And through the banks Wall 
Street has a strong, strangling rope around the neck of 
every borrowing individual and corporation in the United 
States. It is the physical control over the actual money 
that is the power. For actual cash is and must be the 
foundation upon which rests that vast inverted and in- 
flated pyramid of bank "credit" that is at least ten times 
larger than the volume of money. Many of the evils of 
the present system are directly caused by improper state and 
federal banking laws, particularly as to bank reserves. 

When now the combined wealth of just two living Amer- 
icans, if turned into cash and withdrawn from the banks 
and hoarded, would rob every bank and trust company in 
the country of practically all their cash reserves and force 
them to call in most, if not all, of the fifteen or more billion 



CORPORATE CURRENCY 



i224 UNITED STATES MONEY vs. 

dollars of credit loans l^^ally resting on such cash reserves, 
the power of such men will be understood and we may 
well be gravely concerned about the future, as this con- 
centration continues at compound ratio. 

The banks in the country have a greater need of legis- 
lation to remove the possibiUty and danger of frequent 
**silent raids" on the cash reserve of the kinks by power- 
ful manipulating "special interests" than to protect against 
infrequent panic-inspired "runs" ^ small depositors, for 
usually the "runs" are only the effect of the panic which 
the "raids" cause. If the causes of panics are removed, 
the effects automatically will disappear. In the panic of 
1907, the first important withdrawals and the major part 
of all of the cash taken out of menaced trust companies 
was owned or controlled by the big interests of Wall Street. 
And it was such withdrawals by these very interests in 1907 
that caused or helped to cause or stimulate that dangerous 
and far-reaching panic that involved the whole country 
and all its business, and was only stopped when, at the 
earnest pleading;s of Wall Street, the vaults of the Federal 
Treasury were opened and millions upon millions of public 
money was dumped into the financial institutions of New 
York City as an advertized bluff to quiet the general alarm 
and restore confidence in the banks. 

Money is power, control of money. Growth of this poiver 
must be checked now or never, and there is no time to be 
lost Law, backed by the strong arm of the Federal Gov- 
ernment, supported by the popular will, is the only force 
that can resist, regulate and effectively control the over- 
swollen power of money. 

Will all this insane lust for profit and power end in 
general confiscation as the one alternative i^ financial, inr 
dustrial and political serfdom to some one uncontrolled, irre- 
sponsible, insatiable, imperious, man-master, who has all 
power and no responsibility, and whose only virtue is that 
he has "got the coin"? All lovers of orderly government 
hope not. Will the "interests" madly drive on over the cliffs 
to destruction? 

If the banks dared to do so, instead of joining with Wall 
Street in a private central bank conspiracy to help ccwtier 
every other dollar of real money not already controlled by 
**high finance," such banks would be on their laiees in 
fervent prayer to Congress to rescue the financial institu- 
tions from the greedy and every tightening grip of Wall 



CORPORATE CURRENCY 225 

Street. The one remaining chance of salvation for the 
banks and the business interests dependent in any way upon 
the banks is the creation of an independent financial power 
bigger and stronger than Wall Street and its allies, a Gov- 
ernment central bank or institution absolutely owned and 
controlled by the Federal Government, to supply banks di- 
rect and the people through the banks an adequate quantity 
of public currency to keep the cash reserves up to stand- 
ard and thus maintain an ample volume of bank "credit" 
based on such reserves always available and ready at reason- 
able cost and on fair conditions for the legitimate and fluctu- 
ating needs of business. This done, the $75,000,000 or the 
$750,000,000 can be withdrawn from banks if Wall Street 
and its foreign allies so desire. It will do no harm because 
as fast as it is withdrawn its place will be taken by Gov- 
ernment currency supplied on fair and reasonable terms by 
such public institution issuing the currency. This plan 
absolutely protects the banks and the entire business com- 
munity, takes all excessive and dangerous power away from 
Wall Street, makes future panics impossible, and does not 
harm or endanger the banks, the Government or the people. 
And this or some similar plan is the only way of escape for 
the people and the country from present evils and dangers. 
Wall Street then would not withdraw its funds because it 
couM gain no advantage by so doing. The banks will find 
the Government, the people, a better friend and a more 
generous and safe master than Wall Street. Their rights 
and privileges will be clearly defined and enforced by law, 
and not left subject to the greedy will and pleasure of 
interests that will promise and not perform, help only that 
they may the better rule and exploit. The welfare of 
the banks and the people are or should be mutual, and Wall 
Street is the deadly enemy of both. 

The sharp claws of "hig^ finance" can be clipped in no 
other way. It is the only way to emancipate the banks, in- 
dividual and corporate business, the people and the Gov- 
ernment from the intolerable and increasing financial des- 
potism of Wall Street. 



CHAPTER XIV. 
THE SLAVERY OF DEBT. 

Mortgage on Hmnan Race 39 BilUont. 

The official mortgage on the human race now is $39,- 
343,079,476. That is the bonded debt of all nations. It is 
nearly 10 per cent of the wealth of all the countries on the 
gjobe. It is about $22.00 per head for every man, wcxnan 
and child in all Christendom. The aggregate interest on 
this world's debt is approximately $2,300,000,000. 

Since Columbus plucked the American continent from 
the unknown in 1492, down to date, the whole world has 
produced for all purposes $12,935,042,800 of gold and $13,- 
214,956,600 of silver. If every dollar of this gold and sil- 
ver output of the entire earth for the last four hundred 
years was applied upon the principal of the world's debt 
there would remain unpaid $13,193,080,076, a sum exceed-* 
ing half the value of all the precious metals mined since 
1492. 

Portions of these debts are constantly falling due by ma- 
turity. The issues are refunded over and over. Every 
year, on the average, the total debt is increased, the debt 
burden on the human race is made hep^vier. In 1908 all 
nations expended $10,177,280,993 for all purposes and 
raised from all sources $9,969,519433. The deficit wa< 
$207,761,560. This was borrowed and swelled by that 
amount tibe principal of the world's mortgage detk, and 
the yearly interest proportionately. Thus interest com- 
pounds and humanity constantly sinks deeper and deeper 
mto the quicksands of hopeless debt. 

If one-tenth of the world's debt falls due each year it 
would require $3,900,000,000 annually to meet pa3rments on 
principal and $2,300,000,000 to pay the yearly interest, a 
total of $6,200,000,000. This is double the total of all 
money of the United States* The interest must be paid, 
but the principal falling due usually can be extended, re- 

226 



CORPORATE CURRENCY 



WORLD'S BONDED DEBT 

coMsn/vrzy /AfCASASwa 



funded, if the owners of the bonds consent, and on the 
terms and conditions which they dictate. 

The Gold "Joker." 

Practically every dollar, principal and interest, is pay- 
able in gold coin. The entire stock of gold for all pur- 
poses held by all the nations, 46 of them, aggregates $6,604,- 
100,000. This would pay just one year's interest and one 
installment of 10 per cent on principal and leave $204,- 
000,000. If we use this $204,000,000 on next year's pay- 
ments, principal and interest, of $6,200,000,000, where will 
we get the other six billion dollars of gold with which to 
meet our payments? There is only one place to get it be- 
cause last year the owners of the bonds got all there was 
in the world except the two hundred million balance. We 
must buy it of the money changers at whatever price they 



228 UNITED STATES MONEY vs. 

may exact Now, Shylock may not actually demand and 
cut out the pound of flesh next to the heart and carry it 
away this year, or next, or the next. But when he de- 
manded such condition in the bond he showed that he had 
the disposition that sometime will cause him to take ad;- 
vantage to use the power he undoubtedly has, and aug- 
ment his profits by tightening the screws on all humanity. 

The above computation is based on the assumption that 
the whole $6,604,000,000 comprising the world's stock of 
gold is available for such use. The fact is the larger por- 
tion of all gold is hoarded by the different governments 
and could not be obtained for any purpose or at any price. 
There probably is little more than one billion dollars of 
actual gold free for ready current use, or not enough to 
meet half of one year's interest, not mentioning principal. 

Providence is coming to the rescue of the race, but not 
fast enough to overtake the usurers. The gold output of 
the world has doubled in recent years. In 1908 the world 
produced $441,932,000 of gold; $113,996,000 was used in 
the arts, leaving $327,936,000 for monetary purposes. It 
took two-thirds of this to meet the deficits of governments 
of that year. Hunting for gold is precarious, hazardous. 
No one can see into the ground. It is a big gamble. "Gold 
is where you find it," is the old saying;. If you get it today, 
it may "pinch out" tomorrow. No one positively knows but 
what this year will practically exhaust the available gold 
ore and the gold output fall to nothing after that. Probably 
it will not, but it is a possibility. Yet all principal nations 
have been cajoled or driven to take the plunge, the giddy 
gamble, and we have made 39 billion dollars of Government 
debts payable at a future time in a commodity that may not 
exist in any available form when that time arrives. 

We are not complaining, nor advocating abandonment of 
the gold ' standard, nor a law prohibiting the making of 
contracts payable in gold coin. We'll cross that bridge 
when we get to it. We are in a boat easier to get into 
than to get out of. We'll probably have to stay in it, and 
do the rowing for the owner of the boat, even if he keeps 
piling a bigger and heavier load on the craft We are only 
speaking plainly now so that the facts may be known and 
understood clearly as we prepare to work harder to cam 
more to meet the increasing biu'den we are sure to have to 
bear because voluntarily we have given the usurers the 
legal right to increase our financial burdens for their profit 



CORPORATE CURRENCY 229 

The great international battle of the future may not be 
with guns or tariffs. It will be a hug» and fierce struggle 
between the giant governments for physical possession of 
the relatively small quantity of available gold, Ihat they may 
be in position to comply with the possible demand of the 
usurers for gold payments in some future national crisis 
when financial panic or actual war has made the opportunity 
by reducing the Government to a Condition of helplessness 
so that it cannot resist or refuse the demand. It is im- 
perative, more now than ever, that the Government of the 
United States keep absolute and exclusive control over its 
monetary system and every branch thereof. If it surren- 
ders this power to the usurers it is lost, it will commit finan- 
cial if not political suicide. 

We cannot refrain from asking another question in pass- 
ing. Suppose after March 14, 1900, the date on which 
Congress passed the gold standard act, the output of gold 
had fallen off half instead of doubled, what would have 
measured in property and labor? The President and the 
been the result ? The promoters of the gold standard inter- 
nationally expected that the production of gold would de- 
cline, and it is almost a miracle that it went the other way. 
If it had fallen off half, would not the value of all prop- 
erty and labor have fallen 50 per cent in value? Would 
not gold and bonds payable in gold have doubled in value, 
financiers have publicly attributed the advance in prices to 
the increase in the output of gold. If this be true, it must 
also be true that if the gold output had fallen off instead 
of increased the prices of everything else would have gone 
down proportionately. So we have put ourselves where 
we can only bet on the mysterious and uncertain future gold 
supply, trusting the Lord and "hoping for the best/* What 
a pickle that is for the whole human race to be in ! 

The world will find a way out of the hole if the hole ever 
gets hot enough, but meantime we must expect that the 
usurers will get away with most of our belongingfs before 
the race gets mad enough to climb out of the hole and throw 
the Shylocks into it. 

This is not an argument for free coinage of silver. That 
might have relieved a little or postponed the inevitable day 
of settlement slightly, but it was not the remedy. We 
now have the gold standard and must adjust ourselves to the 
inevitable and govern ourselves accordingly. 

So far but half the tale has been told. Only government 



zzo UNITED STATES MONEY vs. 

debts have been mentioned. While the interestrbearing 
United States bonded debt on October 31, 191 1, was $963,- 
349,390, the debt of all states, cities, counties and school dis- 
tricts is more than double that amount. In 1906 the aggre- 
gate debt of the states was $234,314,190 and of counties, 
cities and districts $1,629,881,636, total $1,864,195,826. In 
fact. New York City alone has a debt that is crowding the 
national debt in size. It is $750,245,583. 

It is possible that debts of this kind in different coun- 
tries at least will equal the aggregate debts of all govern- 
ments. If so, the total of all public debts would be 78 
billions of dollars, or 20 per cent of all the wealth of the 
world. And the rates of interest on municipal debts aver- 
age much higher. Compound interest that owners cannot 
spend may in one generation increase the debt to nearly 
50 per cent of the world's wealth. 

Then we must add the vast issues of corporation bonds, 
also payable in gold, with interest rates averaging at least 
50 per cent higher than on Government bonds. 

Every share of stock is a title deed of ownership of an 
interest in the corporate property; every bond is a mort- 
gage on such corporate property. 

The railroads alone of the United States in 1910 had a 
bonded debt of $9,600,634,906, and an unfunded debt of 
$269,887,378, a total about equal to one-fourth of the aggre- 
gate Government debts of all the countries in the world. 
In 1900 the railroad debt was only $5,758,592,754. In 
ten years railroad mileage increased 25 per cent, but the 
bonded debt was swelled 66 per cent. From 1900 to 1910 
railroad capitalization (stock and bonds) increased from 
$11,517,185,508 to $17,981,454,096, or 56 per cent. The big 
trusts have billions upon billions of bonds outstanding. The 
street railways, telephone, electric light, gas, telegraph and 
hundreds of other kinds of corporate enterprises have 
bonded debts that approximate if they do not exceed the 
entire actual cash investment, the stock being largely ficti- 
tious. If such bonds in all countries v/ere totalized and 
added to the Government, state, city, county and school- 
bonds the grand total might reach 150 billion dollars, or 
about 50 per cent of the wealth of the world. 

Bonds we believe are included in the inventory of the 
world's wealth. If bonds now do, or soon will, equal half 
of the world's wealth, then all the wealth other than bonds 
of the entire human race already is mortgaged to the 



CORPORATE CURRENCY 231- 

usurers for 100 per cent of its value, and the debt is all pay- 
able in gold ! 

But assuming 100 billions as a conservative estimate, 
the yearly interest that must be paid by the peoples of the 
world on bonds will exceed five billions of dollars, or five- 
sixths of all the gold in the hands of all nations, available 
and unavailable. This would make the debt $60.00 for every 
human being on the globe. Leaving out the Orient, the 
debt would be nearly $100.00 per capita. 

Every dollar of this awful tax directly or indirectly must 
come out of the people, out of those who toil, those least 
able to bear the burden. If raised by tariff, tax on cor- 
porations, personal property, real estate or otherwise, it 
usually is passed along and saddled upon producers. The 
adjustment is made by raising rents, transportation charges, 
prices of food and clothing. Capital knows the game, but 
labor does not, and cannot dodge the blow. 

And everybody who does anything with head and hands, 
who owns any kind of securities or property other than 
gold bonds is here included among the producers and must 
help pay this ever-increasing mortgage interest burden. And 
to get a sufficient income from their modest fortune most 
people must invest in securities yielding larger income than 
Government bonds, and in property and factories, all of 
which is mortgaged to the great international individual and 
incorporated usurers who have billions night and day yield- 
ing compound interest. At the present rate of progress it 
will be only a matter of time, and relatively a short time, 
when one man or one family will own and rule the entire 
earth and all the people on it. 

In the broad sense, the frightful load of the cost of roy- 
alty, vast standing armies, huge navies, excessive trans- 
portation charges, monopoly prices, and a thousand other 
big and little profits and grafts all rests upon the calloused 
and jaded back of helpless human labor. And all this is 
borne chiefly for the sake of yielding $5,000,000,000 
of annual income to a few smug owners of the vast fixed 
income or bond wealth of the world whose principal labor 
is cutting coupons and scheming to devise a way to double 
by law or license their mortgage on the human race with- 
out increasing their investment. This they will do by 
doubling the interest rate as soon as their international 
money combine is complete and has eliminated all impor- 
tant competition for such bonds. And the National Reserve 



232 UNITED STATES MONEY ts. 

Association is to do that very thing here, as similar institu- 
tions largely have already done in England, France, Ger- 
many and Austria. It is to confederate all American banks 
and financiers, the individual and incorporated usurers, and 
be the United States branch of the world-wide money trust. 

Debt Slavery. 

This is human slavery ; slavery of the toiling millions to 
the usurers, their masters. The interest burden is the lash 
that forever goads and drives. It is worse than the "black- 
snake" because it is constantly plyed night as well as day- 
time. It never stops. It is constant as the flight of time. 
It is as merciless as fate. 

The one object of ordinary involtmtary servitude is to 
get the fruit of other's toil without paying for it. That is 
8ie object of interest slavery. The old way was individual, 
debt enslaves the race wholesale. In ordinary slavery the 
master is obligated to feed, clothe and preserve the life and 
health of his human asset. It pays him to do so. The in- 
visible foreign masters who profit from the grindii^ sys- 
tem of slavery through debt acknowledge no responsibility 
for the welfare, health or even the lives of their victims. 
The driven men, women and children all must shift for 
themselves; they must hustle or starve and die. Ordinary 
slavery could know just who was responsible for its wrongs, 
abuses. It could appeal in the name of humanity to the 
masters direct. As time goes on and the human tMirden is 
steadily increased by multiplication of national, state, county, 
city and district debts, and the seas of corporate debts are 
funded into oceans of interest bearing gold bonds, and in- 
terest rates are compounded and advanced throughout the 
world, humanity can only feel the pinch as it groans and 
staggers under the cumulating load. It never can know 
just how the mysterious game is worked or just who tight- 
ens down the screws. It is all so easy, simple, subtle. But 
it is real, very real, terrible. The pressure is applied on 
every living soul at the cradle and ends only at the g^ve. 
Every child is bom with a mortgage on its back that dooms 
it to life-long toil. Unborn generations are mortgaged into 
involuntary, life-long, helpless debt slavery years before 
the Almighty breathes into them the breath of life. Their 
immortal souls are predestined by the universal debt sys- 
tem to be coined into additional dollars to gratify the in- 
satiable greed and avarice and profit-lust of tine usurers. 



CORPORATE CURRENCY 233 

This is not a new or original system. It is the identical 
plan always in use in the red-light district of any large city. 
White slavery would be impossible but for the system of 
debt slavery that holds the unhappy daughters of the race 
in its sharp and merciless talons. It is Sie common prac- 
tice of every dive keeper cleverly to plunge every new girl 
quickly into such hopeless debt under one pretext or ano^er 
that she never can get the debt paid and escape until the 
deadly pace and life of shame robs her at last of good looks 
and healthy if not of life, then she is kicked out to shift 
for herself, or die, or become a permanent burden on the 
community as an object of charity. The great money 
changers of the world, the few big ones, who really dom- 
inate in the finances of all countries, those who shape inter- 
national monetary systems and policies, have borrowed this 
simple but effective device from the slums. They are rap- 
idly applying it to the successful and permanent enslave- 
ment of iJie entire human race, white, black, brpwn, red and 
yellow, male and female, adults and children, in a universal 
bondage of hopeless debt 

Warning to American Jews. . 

Author has no prejudice against the Jewish race. Some 
of his best friends are Hebrews, He greatly admires many 
racial traits, the marvelous history of that people and its 
triumph over obstacles and adverse environment in various 
countries during the past two thousand years. 

And author earnestly hopes that American civilization 
may ever proceed on the original plan, the Gentile and Jew, 
protestant and catholic, all enjoying equally and impar- 
tially liberty of conscience and equality of opportunity. 

But right now action is being taken by certain powerful 
leaders of the Hebrew race that may start in free America 
that dreaded European cry "Down with the Jews!" In 
the hope of helping to avoid the establishing of conditions 
here that may become for the Hebrew race as unhappy and 
intolerable as in other countries, even Russia, this word of 
warning to the Jews is sounded. 

Rothschild was a Tew. His descendants comprise the 
four great banking houses of that name in Europe — in 
London, Paris, Berlin and Vienna. In 1863 the wealth of 
this one family was conservatively estimated at $3,200,000,- 
000, over three billions of dollars. This huge total com- 
pounded during the past fifty years and increased by inci- 



234 UNITED STATES MONEY vs. 

dental investments in mines, timber and many other things, 
may now amount to fifty or one hundred billions. No one 
outside knows the amount. With alliances controlled by 
this family it surely directly or indirectly controls a large 
portion of all government bonds and at least one-third of 
the world's estimated total wealth of $377,000,000,000. 

But suppose the Rothschilds themselves only own $39,- 
000,000,000, an amount equal to the bonded debt of all the 
governments of the world, with an annual income of $2,300,- 
000,000 or two-thirds what their total wealth was in 1863. 
Any change either way in these figures will be a variation 
only in degree. In no way does it materially change the 
acknowledged potent fact that in all great national and 
international monetary and financial affairs the Rothschilds 
always play the ruling hand. They possess masterful genius 
and financial intellect. But it is the sheer weight of liquid 
or ready wealth held in such large quantity that all the 
nations of the world must go to the Rothschilds for finan- 
cial assistance in time of peace, or before they can go to 
war whatever the provocation or emergency, that gives 
them supreme power in the world's affairs. No war can 
be waged without money, and no large nation can get ade- 
quate money to finance a war from any one but the Roths- 
childs. Therefore it is reasonable to assume that whenever 
any war is begun the Rothschilds have consented thereto. 
They may finance both sides, because it is immaterial 
whether the interest profits they crave come from one or 
both countries. In fact the war furnishes an excuse recog- 
nized as legitimate for charging both nations higher inter- 
est rates not only on the new debts but on old obligations 
maturing and being refunded. Increase to 4 per cent from 
3 per cent is a 25 per cent increase in the total income and 
in the value of bonds, measured by their earning power. 

It is known, of course, that after the nations have fought 
for a while and murdered tens of thousands and wounded 
and permanently maimed hundreds of thousands of human 
beings on both sides, pressure exerted by other govern- 
ments instigated by the financiers will force a quick com- 
promise, leaving the nations both in approximately the 
same condition as before except that each has vastly in- 
creased its debt and the annual interest burden on its peo- 
ple while the financiers have gotten rid of accumulated 
capital in exchange for high interest gold bonds that can- 



CORPORATE CURRENCY 235 

not be paid for perhaps thirty or fifty years. This surely 
is the result if not the deliberate plan. 

Then again, the debt of the principal European countries 
has been doubled or vastly increased during the long period 
of "armed peace." 

Frequent rumors of war or warlike preparations each 
year have been ping-ponged back and forth between the 
countries in the public press. These have tended to excite 
popular fear, hate and patriotism and cause the people to 
consent and even to urge the governments to swell vastly 
the mortgage burden upon the peoples for funds to increase 
and equip still larger standing armies and to build greater 
and more expensive navies. By withdrawing millions of 
men. into armies and idleness it reduces production and the 
earning power of the people, increases the burden on those 
employed, and makes it more certain that existing bonds 
will not be paid but will be refunded and increased. Why 
not have bigger armies, navies, forts, guns, idleness of mil- 
lions of soldiers, rumors of war or even occasional war, 
when such things are so fruitful, so necessary to cause the 
issuance of more bonds to provide profitable investment for 
the $5,000,000,000 of excess income derived yearly from 
interest paid on existing issues of gold bonds? 

These conditions explain at least a substantial portion of 
the bonded debt and yearly interest of these countries : 

Country^ Bonded Debt. Yearly Interest. 

United Kingdom $3369,93i»36o $152,759411 

British Colonies 699,198,319 29,040,837 

British India 1,346,997,187 41,687,212 

Russia 4,558,152,565 204,766421 

France 5,898,675,451 186,802,380 

German Empire 1,094,790,575 40,856/344 

German States 3,175,698,141 132,94^,135 

Italy 2,602,299,757 96,941,138 

Austria Hungary 1,063,795,105 60467407 

Austria 96o,997,758 35»392,309 

Hungary 1,146,500,658 37,136,118 

Spain 1,817,614,397 78,709,000 

Portugal 864,561,212 29,907,983 

Belgium 663,325,145 27,022,108 

Belgium Congo 20,089409 1,260,306 

Egypt 463,854,243 17,904,885 

Greece i57>877.o67 5»94O,304 



236 UNITED STATES MONEY vs. 

Turkey 527,985*636 36,494,817 

Netherlands 451,309,208 14,608,371 

Canada 323,930,279 ii,93i»537 

Japan 1,287,604,201 76,283,836 

China 601,916,605 9^,373^017 

United States 1,023,801,531 21,803,836 

Peaceful and quiet little Netherlands (the home of the 
dove of peace, the Hague) and Belgium together have a 
larger debt than the United States, although their aggregate 
wealth is but $13,000,000,000, as against $125,000,000,000 
for this country. Belgium has 7,074,910 population and a 
debt of $93.77 per capita. Evidently they have been fright- 
ened into hopeless, permanent debt by the menacing actions 
of their neighbors towards each other. Poor exploited 
Congo, whose ignorant natives do not know a bond from 
a hole in the ground or interest and the gold standard from 
the milky way and the Aurora Borealis, has been given a 
hot dose of the "blessings of Christian civilization" by being 
saddled with a debt of $20,000,000 on which annually 
they must pay $1,260,306 interest profits to the exploiters. 
Unwelcome British rule has imposed upon India a yoke 
of mortgage debt 40 per cent larger than the total bonded 
debt of the United States. 

Portugal with $2,500,000,000 wealth has a government 
debt of $864,561,212, or 35 per cent. No wonder it tired 
of royalty and sought relief as a republic. The tombs of 
Pharaohs of Egypt now groan under a public debt half that 
of the United States. China may be the next debt victim. 

Is hopeless debt and perpetual interest slavery forever 
to be the price of Christian civilization and civil liberty? 

Large portions of most of these vast bond issues are 
in the strong boxes of the Rothschilds. No doubt they are 
satisfied with their clever work in Europe, their manipula- 
tion of Governmental policies, their control of state and 
private finances through great private central banks domin- 
ated by them in the principal countries, and their mastery, 
through the purse, over kings, czars and emperors. They 
have seen the average government debt of European na- 
tions grow until it has become about equal to one-tenth of 
the entire wealth of those countries. 

But they must be sorely disappointed and dissatisfied with 
the work and progress of their direct personal representa- 
tives in the United States. Here we have the richest and 



CORPORATE CURRENCY 23jr 

most substantial country, the best security, oii tibe globe and 
the financiers have succeeded in keeping it in debt only 
about three-fourths of i per cent of its $125,000,000,000 of 
wealdi. And worse than that, the Government has kept 
control of its monetary system and currency supply and 
so conducted its finances that most of the bonds bear only 
2 per cent interest, or 40 to 60 per cent less interest an- 
nually than is paid by other governments that have turned 
monetary control over to the same private interests that 
buy and own the bonds issued by themselves for the Gov- 
ernment to themselves for their individual profit. 

Then no doubt they have been worried over another 
serious problem. Their financial ascendency and control 
over governments and maintenance of relatively high in- 
terest rates is possible only so long as they own or at least 
control all large loanable funds seeking such investments; 
only while there is no important competition. 

The wonderful natural resources of the United States 
and the boundless energy of its people has greatly increased 
the liquid capital of the country. Hundreds of millions of 
American debts to European investors have been paid off 
or bought up by Americans. This has tended to increase 
the supply of idle capital in Europe. And now the United 
States has invaded Rothschild's exclusive melon patch by 
bidding for large issues of the new or of refunding bonds 
of various governments. This is a serious situation. If 
this competition goes on it is certain to lower the rates of 
interest not only on new issues but ultimately on the entire 
39 billion dollars of present bonds, to say nothing of state, 
county, city, district and corporation bonds. Genuine com- 
petition, such as the United States could furnish with the 
available investment capital it now commands or soon will 
have, might easily lower the average bond interest of other 
govenmients to the 2 per cent basis enjoyed by our Gov- 
ernment This would cut down by one-half the annual 
income of the owners of the fixed income or bond wealth 
of the world. They would lose thereby $2,500,000,000 
annually. This in effect would be the equivalent of a di- 
rect shrinkage of 50 per cent in the value of the 39 billions 
of bonds, an immediate loss of nearly 20 billion dollars, 
for the value of bonds is measured by their rate of inter- 
est, the annual income they yield, their earning power. 

And we now see the stealthy hand of these foreign bond- 
holders in one of the most clever and far-reaching schemes 



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CORPORATE CURRENCY 239 

ever devised by the mind of man, driving American senti- 
ment and politics rapidly toward the adoption of a plan that 
will instantly remove the one menace to the supremacy and 
profits of the Rothschilds, viz.: competition for bonds. 

It is believed that the scheme now called "Aldrich plan" 
was originally conceived and worked out in Europe by the 
Rothschild interests, and that it was put out here or 
pushed by Jacob H. Schiff and Paul M. Warburg of the 
firm of Kuhn, Loeb & Co., said to represent here or do 
business with the Rothschilds of Europe. It is at least 
certain that Mr. Schiff of that firm was actively advocating 
a central bank as far back as 1906, when the New York 
Chamber of Commerce on October 4, 1906, officially 
adopted the plan after sending its representatives to Europe 
for several months to meet and personally discuss the mat- 
ter with the big financiers of Europe. 

The official records of the Chamber, printed elsewhere in 
this volume, show these facts. 

Since then Mr. Warburg has been the most active of 
the Wall Street financiers in promoting the central bank 
or National Reserve Association plan by way of articles, 
speeches, conferences, and in persuading bankers and the 
American Bankers' Association to join in promoting the 
scheme through Congress, and in thereafter participating in 
its benefits. He has been greatly aided from the outset 
by the Standard Oil interests, officials of the National Bank 
of Commerce and National City Bank of New York (Mr. 
Schiff being a director of both of these banks), and affil- 
iated banks in that and other cities and by many of the 
powerful financiers of Wall Street. We show elsewhere 
conclusive documentary proof that the Aldrich plan is iden- 
tical with what we could call the Rothschilds* plan, but have 
named "New York Chamber of Commerce's first plan," 
adopted in 1906, except that the original plan at least made 
a pretense of Government control, while the Aldrich plan is 
strictly for a private corporation. 

At the currency conference of the National Civic Fed- 
eration in New York on December 16, 1907, Mr. Spyer 
presided, and Mr. Selig^an introduced the prepared reso- 
lutions. Both are Hebrew Wall Street international bankers 
said to do business for or with the great financiers of 
Europe. August Belmont, who then was president of the 
National Civic Federation, is said also to represent or do 
business with the Rothschilds. 



240 UNITED STATES MONEY vs. 

Jacob H. Schiff seems to have led the movement that has 
caused the abrogation of the commercial treaty with Russia. 
The action taken was right, for obedience to the provisions 
of all treaties must be enforced. But we wonder if the 
only object was to punish Russia for denying passports to 
a mere handful of American Jews ? 

Was there back of it in Europe a Rothschild scheme to 
embroil the two nations so that each would increase its 
bonded debt, sell more bonds, to be prepared for possible 
complications if not actual hostilities? 

Several attempts looking to a vast increase of the bonded 
debt of the United States have been made, other attempts 
will be made. But this Government should pay every 
dollar of its bonded debt and then stay out of debt. It 
would be a wholesome example to the world. It would show 
to all nations the advantages of self-government and human 
liberty. 

With the Standard Oil, the Morgan and the Kuhn, Loeb 
& Co. groups linked by tics of mutual interest and profit 
with the Rothschilds and their affiliations abroad, there 
would be complete harmony and co-operation and practically 
no competition between America and Europe for big gov- 
ernment loans. All danger of lowering interest rates has 
been removed and an effective plan adopted that will enable 
substantial increases from time to time in the bond inter- 
est rate the world over. There will be no adequate market 
for such bonds except with this international money com- 
bine. Truly, the United States proposes to become a "finan- 
cial world power" by this merger, but it will be controlled 
from the other side because Europe, the Rothschilds, will 
furnish 90 per cent of the cash. Wall Street seems to be 
willing to play second fiddle and permanently sell out the 
interests of the United States and the welfare of all the 
people for the mere hope that by thus getting near the 
money throne of the Rothschilds some crumbs from their 
table will fall within the reach of our high financiers. 

This Rothschild scheme if adopted will ultimately plunge 
the United States into the slavery of debt like the European 
nations. They do not want 2 per cent bonds. So it is 
proposed to increase the interest 30 to 50 per cent, make the 
rate 3 per cent, refund the present United States debt and 
snake it payable in fifty years. That is the Aldrich plan, 
the provisions of the p«idin^ bill. Then it will be proposed 
to so change the tariff and mcrease expenditures that each 



CORPORATE CURRENCY 241 

year will show a deficit that can be converted into long time 
bonds. No doubt it is expected that in time the mort- 
gage debt of this country will be increased to $2,000,000,- 
000, or even more, which with interest at 3 per cent instead 
of 2 per cent would be the equivalent of a bonded debt of 
$3,000,000,000 so far as the yearly interest burden is con- 
cerned. 

The only way the human race can get the benefit, or its 
due because of the rapid increase of the world's wealth, is 
to have free and unrestricted competition for loans main- 
tained, so that as wealth increases the rate of interest will 
decrease. 

A billion of public currency now is to be taken away from 
the Government and given outright and free to a private 
corporation owned by the banks, and ultimately the Na- 
tional Reserve Association is to control the entire three 
billions of money heretofore issued by the United States 
Government. The association will gather up the United 
States money, hold it as a "reserve" and issue thereon two 
or three times its amount in corporation currency. Then 
by contraction and expansion of the money supply it will 
rule every bank and manipulate the supply of $20,000,000,- 
000 of business credit and all prices and dominate every- 
thing in America for the profit of the world-wide money 
trust of which the National Reserve Association will be the 
American branch. This is the game, the program. . If it 
succeeds the republic and all its people will find themselves 
permanently enslaved by the bondage of debt, chained help- 
lessly to a system that takes everything and gives nothing, 
the victims of a soulless and sordid conspiracy that is 
moral if not legal treason against the welfare and perhaps 
the life of the nation. 

When this hour comes, and the people find that they have 
been tricked and betrayed and are helpless, the country 
may become as inhospitable as Russia to the Hebrew race, 
if unf ortimately the cry goes up "Down with the Jews !" 

Many of the American people will believe that the insti- 
gators of their troubles and the chief beneficiaries are those 
greatest of all world-owning Hebrews — ^the Rothschilds. 

It will be to the interest of every American Hebrew out- 
side of Wall Street to have the Aldrich plan defeated, and 
every loyal citizen of this race will demand that the Gov- 
ernment of the Republic retain control of the people's 
money supply and avoid permanently plunging this gfreat re- 
public into the bondage of hopeless debt. 



CHAPTER XV. 
NATIONAL BANKING SYSTEM. 

Origin — ^History. Banks Against Government Money. Want Bank 
Currency. Gold Standard-Free Silver Campaign. Law-Made 
Bank Profits. Astonishing Political and Legislative Intrigue. 
Official Record Revealed. Investigation Imperative. Wat 
1893 Panic Caused by the Banks? 

» 

The American Bankers' Association officially represent- 
ing all banks, by resolution in November, 1911, indorsed 
and urged Congress to adopt the Aldrich National Reserve 
Association plan. It is actively helping to promote the 
scheme. It is alleged to be spending money for that pur- 
pose, furnished by the banks. It is said to be helping to 
jcreate and steer public sentiment through the press or with 
special literature prepared or distributed by various banks, 
at the cost of the banks, or to organize or encourage the 
organization of so-called "citizens' " associations and mone- 
tary reform leagues to entice and marshal business men to 
support this movement. Presumably this united effort and 
expenditure of money is expected by the banks to yield 
benefit to the banks. 

It is conceded that the bill prepared and advocated by 
the National Monetary Commission and now pending in 
Congress would create a mere private corporation named 
National Reserve Association, and that every share of the 
stock will be owned and voted by banks. And that as the 
management of such corporation, or forty-two of the forty- 
six directors, will be chosen by the banks, the institution 
will absolutely and permanently be controlled by the banks, 
the banks exclusively wielding the powers and getting the 
profits of the National Reserve Association, There will 
be no dispute as to these facts. 

It is proposed that Congress take away from the Gov- 
ernment and delegate to such private corporation certain 
governmental powers heretofore exercised under the Consti- 
tution by the Federal Government exclusively. And it 
would prohibit the Government and everybody except such 

242 



CORPORATE CURRENCY 243 

corporation from hereafter exercising such powers. In 
other words, it confers an exclusive monopoly by law of 
Congress upon such private corporation for the sole profit 
of the banks owning the stock of . such corporation. It is 
a syndicate of banks, a central money trust. 

The chief grant is the exclusive right of issuing public 
currency for use as money by the people. It will thus regu- 
late the volume and supply of the money the people must 
have as a medium of exchange and to put into bank re- 
serves as a cash basis on which banks loan credit to borrow- 
ing customers. 

In a collective capacity, acting through their subsidiary 
corporation, the National Reserve Association, the banks 
hereafter will manufacture with the printing press their 
own "cash reserves" on which the huge volume of bank 
credit is based. What is the use of the banks going to the 
expense of providing actual cash capital when its central 
corporation can print and supply currency, money, to the 
banks without legal restraint or limit? It's all in the bank 
family. They can do as they please. The Government and 
the people henceforth are to have nothing to say about 
the public currency or the quantity to be furnished for their 
use. 

It is also proposed that the Government shall turn over 
to this corporation as received all money raised for every 
purpose from any source, amounting to nearly three-fourths 
of a billion dollars annually and that such corporation shall 
not pay the Government anything for the use of this vast 
sum while on deposit. Also, that all disbursements here- 
after made by the Government shall be through such cor- 
poration. There are many other powers and privileges that 
the measure would confer upon such corporation beneficial 
to the owning banks, but the above is sufficient to show 
that the power and profits of the banks would be enormously 
increased and their political influence and control over all 
business vastly augmented if Congress should pass the 
measure. 

Investigate the Banking System. 

This makes it wise and highly proper and important that 
before passing the measure it be definitely ascertained 
whether the banks and those managing banks have in the 
past so conducted themselves that it is reasonably safe and 
wise thus to so greatly increase their profits and powers. 



ifc44 UNITED STATES MONEY vs. 

It could hardly be expected that any sane man would favor 
increasmg the power and pay of a trusted employee or 
trustee clearly shown to have deliberately and repeatedly 
violated his trust obligation and the laws of the land as 
well. If it can be clearly shown that the banks have been 
faithful to their trust, their express and implied obligation 
to the public, always furthered the interests of the Govern- 
ment in return for the rich, valuable and exclusive privi- 
leges and immunities conferred upon them by law, and 
have rigidly complied with the provisions of their charters 
and the laws regulating their conduct, then they can come 
with clean hands asking for the greater benefits and powers 
proposed. But if it shall appear from undisputed sworn 
evidence that a large portion of all national banks have been 
faithless, have ignored their charters and for profit have 
continuously, knowingly, flagrantly violated the laws of the 
land, the acts of Congress, have blocked good and pro- 
moted bad legislation in their own interest, who would seri- 
ously advocate increasing the profits and augmenting a 
hundred fold the power of these very lawless banks and 
bankers by putting the National Reserve Association into 
their hands instead of under the control of the Government? 

Origin of National Banking System. 

The national banking system originated during the Civil 
War. It was a war measure. The facts are set forth in 
detail in "The Origin of the National Banking System" 
and a "Supplement" thereof issued by the National Mone- 
tary Commission. 

A careful study of the facts tends to impress the reader 
that the adoption of that banking system was largely due 
to the belief by Congress, Secretary of the Treasury Salmon 
P. Chase and President Lincoln that in order to market Gov- 
ernment bonds and get money with which to carry on the 
war and save the life of the nation it was absolutely neces- 
sary to buy co-operation of the bankers and Wall Street 
financiers with profits. Their patriotism seemed to have 
been in proportion to the size of the profits they realized 
at public expense from bond transactions and issuance of 
currency. 

Orlando B. Potter, of New York, on August 19, 1861, 
in a letter to Secretary Chase first suggested and in detail 
outlined the national banking system afterwards recom- 
mended by Secretary Chase on December i, 1861 and 



BANKERS FIGHT 
PRESIDENT LINCOLN 




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a46 . . UNITED STATES MONEY vs. 

r862, and later adopted by Congress. One of Mr. Potter's 
chief arguments was : "This would make Goveimment and 
the capital mutually dependent on each other, and every 
bank and banker would feel a daily interest in supporting 
and keeping the Government credit above suspicion." Stat- 
ing it the other way, they would not support the Govern- 
ment that sheltered and protected their business or do 
anything to keep its credit above suspicion, even during its 
life and death struggle, unless they could make a big and 
steady money profit doing so. Isidor Bush, of St. Louis, 
a leading German citizen, on December 28, 1861, wrote 
Secretary Chase favoring his national bank currency plan, 
saying: "It makes it for the interest of capitalists, of the 
money power, and of banking institutions to uphold and 
sustain the credit of the Government. It would increase 
the common interest for the preservation and safety of the 
Union." 

Silas M. Still well, of New York, who at Secretary 
Chase's request aided in drafting a bill for the purpose, 
prepared a pamphlet on the subject that was issued in De- 
cember, 1 86 1, 30,000 copies being printed and circulated 
by the Treasury Department ; and another, called "Explana- 
tory Notes," on January 6, 1862, in which he said: "The 
object to be obtained by this system of banking is to 
provide a plan that will create a demand for bonds and thus 
fund in this way as many demand notes as possible." In 
other words, convert the Government non-interest bearing 
"demand notes," or greenbacks, into interest bearing 6 per 
cent bonds to be deposited by the bankers with the Govern- 
ment in exchange for 90 per cent of bank-note currency 
to be loaned out by the bankers at 6 to 10 per cent, the 
bankers getting and keeping this interest for use of the cur- 
rency and also the 6 per cent on the deposited bonds, a total 
of 12 to 15 per cent less a currency tax of I per cent. 
That was the price that seems to have been necessary for 
the people and the Government to pay to insure the loyalty 
of the bankers and Wall Street financiers at a time when a 
million patriots were at the front risking their lives in 
defense of the Union for $13.00 per month in Goveriraient 
money depreciated below 50 cents on the dollar by these 
same financiers for their own profit. 

On February 9, 1862, Enoch F. Carson of Cincinnati 
wrote Secretary Chase that the people were with him, be- 
lieving that it w;sis a fight between the Government and 



CORPORATE CURRENCY 247 

the banks, and that Mr. Chase represented the people in 
the struggle. Secretary Chase on October 7, 1862, in a 
letter to John Bigelow, expressed the belief that his na- 
tional bank currency plan wotdd "bring to the support of 
the public credit the whole banking interest of the country." 
It would open "a gradually enlarged market for the securi- 
ties of the Government, and thus sustain their credit at the 
highest point." Evidently the Government had not been 
getting the support "of the whole banking interest of the 
country," but Secretary Chase expected that the big double 
profits the Government thus was forced to offer the banks, 
that is 6 per cent on bonds and 6 per cent or more for the 
currency obtained by deposit of such bonds, would "bring 
to the support of the public credit the whole banking inter- 
est of the country." 

December 23, 1862, Secretary Chase wrote Thaddeus 
Stevens, chairman of the Committee of Ways and Means, 
saying : "I see no ground for belief that the funds neces- 
sary for the pay of the army and the prosecution of the war 
can be in any way provided without the support to public 
credit expected from that measure." 

The Government of the republic was in a desperate finan- 
cial hole. Without money the war must fail and the Union 
be destroyed. The bankers could easily help it out and thus 
save the nation's life, but would not do it until they got an 
immediate 12 per cent to 15 per cent profit and a perma- 
nent system that has largely supplanted Government cur- 
rency with bank-note currency, a bank system that in forty- 
eight years has cleared more than three billion dollars of 
net profits ($3,107,185,441), over three times the amount 
of the present Government debt and equal to all the money 
in circulation in the United States. Surely the bankers 
drove a good bargain, and each year for over forty years 
have received millions from the people as a sort of pension 
to keep the bankers patriotic and from backsliding in their 
loyalty to the republic. By frequent Congressional intrigues 
this pension has been steadily increased, until the yearly 
cost to the people of bank patriotism now in time of peace 
is about ten times as much as it was in time of war. And 
under the Aldrich plan reported by the monetary commis- 
sion, it IS now proposed to vastly increase the profits and 
power of the banks without the slightest benefit to the Gov- 
ernment or the people. 

Senator Sherman finally came to the aid of Secretary 



248 UNITED STATES MONEY vs. 

Chase and the bill, the "Sherman Act" was passed on Feb- 
ruary 25, 1863, and approved, he declaring that it would 
"promote a sentiment of nationality," evidently among 
bankers. 

The volume from which the above quotations are made, 
issued by the monetary commission, says on page 84 : "The 
Senate was the stronghold of the banks. It would have 
been impossible to have secured the passage of any bill in 
that body which seemed in any way to be unjust toward 
state banks." All banks then were state banks, so it must 
be clear that the provisions of the law creating the national 
banking system are such as the bankers ai^roved or dic- 
tated. This may explain why the law did not contain a 
single personal penalty on bankers for violating the law 
as to matters pertaining to the safety of depositors and the 
general welfare and yet it imposes upon any public official 
who should countersign and deliver bank notes to any but 
the right bank a fine not exceeding double the amount of 
such notes, and imprisonment not exceeding fifteen years! 

The Sherman Act of February 25, 1863, "An act to pro- 
vide a national currency secured by a pledge of United 
States stodk, and to provide for the circulation apd redemp- 
tion thereof," was supplemented by the law of June 3, 
1864, entitled "An act to provide a national currency se- 
cured by a pledge of United States bonds, and to provide 
for the circulation and redemption thereof." The new law 
of course was more liberal to the banks, and practically 
every change made since has been to increase the immuni- 
ties, powers and profits of the banks, while every proposal 
during the past forty-eight years having for its objectin- 
creasing the soundness of bs^s or the safety of depositors 
and die public, has been defeated in Congress by the lobby- 
ing of tne banks. This was the fate of the recommenda- 
tions of eleven different U. S. comptrollers of the currency 
designed to strengthen the national banking system in the 
interest of depositors and the public. There were about 
sixteen htmdred state banks scattered throughout the coun- 
try. They were turning out corporation currency as fast 
as their printing presses could supply it. Most of this was 
dq>reciated and much worthless. December 13, 1861, the 
Chicago Tribune callckl it '-the ragged and doubtful issues 
o£^ 1,600 corporatwns." There was about $200,000^000 of 
this currency. The inconvenience and loss to the -people 
was frightful There were 10,000 different kinds at bank 



CORPORATE CURRENCY 249 

notes in circulation. Counterfeiters added enormously to 
the voliune, danger and losses. All was confusion. Busi- 
ness was more or less paralyzed. 

To improve this desperate condition as well as to aid 
the Government in carrying on the war Congress by acts of 
July 17 and August 5, 1861, authorized the first national 
Government currency, money, $50,000,000, of "demand 
notes" backed by the Government. These by act of March 
17, 1862, were made legal tender for all debts. It was the 
best paper money in existence, good everywhere, and never 
depreciated but always was eqwd with gold. The bankers 
were furious. They saw that this kind of national cur- 
rency. Government money that all must accept at par be- 
cause it was full legal tender, soon would supplant and 
drive out of circulation the doubtful or worthless state bank 
note curr^icy. So the banks began to fight the Government. 
While the confederates were fighting in front with guns 
the bankers were fighting behind choking off the Govern- 
ment's credit and supply of money. With an enemy both 
sides the Union was doomed. So the Government yielded 
to the bankers. It adopted the national banking system as 
a means of buying the support of the bankers and to pro- 
vide a way by which banks could keep the issuing of cur- 
rency in their private hands and stop the issuance of full 
legal tender Government money. The history of bank in- 
trigue and influence in Congress and opposition to the Gov- 
ernment during the Civil War is the most sordid and for 
the banks the most despicable chapter in American annals. 
The bank selfishness shown then has increased with time 
and with the enormous growth of bank wealth and power 
until in 1912 we see them actually grasping for all power, 
for mastery over ever)rthiqg through a private monopoly 
of the supply of money, 

On March 3, 1865, Qmgress destroyed all state bank 
circulation with a 10 per cent annual tax that remains to 
this day. But with destruction of the $200,000,000 of state 
bank issues, the national bank note currency grew. In 
1864 it was $31,235,270; 1865, $146,406,725; 1866, $281,- 
583,365 ; 1867, $298,759,436. There was not enough bank 
note currency before the war ended to do much good. It 
was the $450,000,000 of Government money, ^greenbacks, 
that carried the Government through that great struggle, 
crippled as they were at the demand of the banks by being 
made only a limited legal tender, after the first $60,000,000. 



250 UNITED STATES MONEY vs. 

Banks Fight Government Currency. 

From 1861 to 1912 the irrepressible and constant aim of 
the banks has been to prevent the issuance of Government 
paper money in order to increase bank currency that yields 
steady profit to the banks. And the present Aldrich Na- 
tional Reserve Association plan is the same fight carried to 
a most audacious and daring extreme. 

Besides the first $50,000,000, an additional $10,000,000 
of full legal tender "demand notes'' were issued under act 
of February 12, 1862. The Government was authorized to 
reissue these as they came back, but not after December 31, 
1862. Thirty thousand dollars was so reissued. These "de- 
mand notes," or first greenbacks, legal tenders, were paid 
in gold as presented. They never depreciated. 

The act of February 25, 1862, authorized $150,000,000 
"United States notes," $50,000,000 thereof to be used to 
take up and cancel the balance of the $60,000,000 "demand 
notes" outstanding, and by July i, 1863, all but $3,350,000 
of the $60,000,000 had been paid and cancelled, the balance 
being retired during the next year. 

But the $150,000,000 U. S. notes (greenbacks), at the 
insistent demand of the financiers and gold gamblers of 
Wall Street, were not made a full legal tender. They were 
by law made "legal tender for all debts, public and private, 
except duties on imports and interest on the public debt." 
Thev were thus only a "limited legal tender." This "excep- 
tion made them unequal and less valuable than gold because 
they could not be used wherever gold could. Such excep- 
tion caused their depreciation as measured in gold. Or in 
other words it caused appreciation of the price of gold 
measured in this Government currency. 

Specie payments were suspended from January i, 1862, 
to January i, 1879. While at times the gold price of green- 
backs went much lower, once to aboi^t 35, the average price 
per year was : 1862, 88.3 ; 1863, 68.9 ; 1864, 49.2 ; 1865, 63.6; 
1866, 71 ; 1867, 72.4; 1868, 71.6; 1869, 75.2; 1870, 87; 1871, 
89.5; 1872, 89; 1873, 87.9; 1874, 89.9; 1875, 87; 1876, 89.8; 
1877, 95.4; 1878, 99.2. And the yearly average currency 
prices of gold were: 1862, 113.3; 1863, 145.2; 1864, 203.3; 
1865, 157.3; 1866, 140.9; 1867, 138.2; 1868, 139.7; 1869, 
133; 1870, 114.9; 1871, 111.7; 1872, 112.4; 1873, 113,8; 
1874, II 1.2; 1875, 1 14.9; 1876, 1 1 1.5; 1877, 104.8; 1878, 
100.8 



CORPORATE CURRENCY 251 

The act of July 11, 1862, authorized another $150,000,- 
000, greenbacks, of which $50,000,000 was used to pay a 
"temporary loan," and a third $150,000,000 issue was au- 
thorized March 3, 1863, a total of $450,000,000 of green- 
backs. The highest amount outstanding at any time was 
$449^338,902 on January 30, 1864. There are still out- 
standing $346,681,016 of these U. S. notes, commonly called 
"greenbacks," or "legal tenders/' Most of them are tightly 
held by the banks in their cash reserves. A gold reserve of 
$100,000,000 in later years was held in the Treasury to 
"secure" these notes, until the gold standard act of March 
14, 1900, increased this gold reserve to $150,000,000. 

In other words, to discredit government paper money, or 
greenbacks, in 1900, when every dollar out was worth dol- 
lar for dollar with gold and had been for over twenty years, 
the gold standard law forced the Government always to 
keep on hand $150,000,000 gold to "secure" the $346,681,- 
016 of greenbacks that are as much an obligation of the 
Government as U. S. bonds. Thus the banks caused the 
Government to actually raise by taxation and the selling 
of long-time interest-bearing bonds payable in gold, the 
enormous sum of $150,000,000 and pile it up idle in the 
public Treasury permanently without one cent of advantage 
or benefit to the Government or the people and when it was 
wholly unnecessary. And this was done to head off the 
possible issuance of any additional Government currency 
and to insure that all future currency would be issued by 
banks for the profit of the banks. 

In contrast, it is interesting to note that by the comp- 
troller's report there was on October 31, 191 1, $744,071,715 
of bank note currency outstanding in the hands of the 
people, five times as much as when the Civil War ended, 
without one dollar of gold held by the Government or the 
banks to secure same ; and it is all mere optional currency^ 
not legal tender, and no one can use it to pay even an or- 
dinary debt if the other party cares to refuse to accept it. 
Of course the currency is sound because the Government 
holds an equal amount of U. S. bonds to secure it and also 
by law has expressly guaranteed such currency. But what 
is behind the bonds? Only the faith and credit of the 
United States, the same identical thing that was back of 
the greenbacks before any gold reserve was provided. 

Surely the credit of the banks behind bank note currency 
does not make such money more sound than if only the 



252 UNITED STATES MONEY vs. 

Government, with all its unlimited taxing power, guaran- 
teed the same. // every dollar of currency was issued and 
guaranteed by the Government, made full legal tender by 
law for all purposes, and secured by whatever reserve of 
gold is considered ample, we would have the most simple, 
sound and practical monetary system in the world. It would 
be the cheapest for the people because the Government 
charges nothing for issuing it. It costs the Government 
but a small fraction of i per cent. But the banks always 
have, and always will oppose it, for two reasons : 

1. It would not yield the banks a steady profit, as bank 

note currency does. 

2. Banks are afraid that the quantity might be so in- 

creased that the people would do more business 
on a cash basis and less on credit bought from 
banks. 

These are the chief reasons actuating the banks and Wall 
Street in their continuous legislative and political struggle 
to discredit and destroy all Government paper currency 
and bring about a complete monopoly in the banks, or in a 
corporation owned by the banks, of the currency issuing 
privilege, as now proposed by the National Monetary Com- 
mission in the most bold form ever suggested. 

The banks won't trust the people and the Government 
not to overinflate the currency, but by the Aldrich plan 
they ask the Government and tiie people to trust the banks 
with unlimited power to both inflate and contract the entire 
currency. And if the plan is adopted it is certain that the 
volume of currency at all times will be either too big or 
too little, for the banks will profit most when the supply is 
not normal, when it is unduly inflated or unfairly con- 
tracted. 

Banks continually warn against the danger of increasing 
the prices of property and stocks by overinflation of the 
currency, but they themselves have inflated bank currency 
400 per cent in twenty years, and they have inflated bank 
credit, which produces the same effect, billions of dollars. 
The banks want to do all the inflating that is to be done, 
and for their own profit. 

By the act of April 12, 1866, instigated by the banks, 
$10,000,000 of greenbacks were retired and burned the first 
six months and not more than $4,000,000 per month there- 
after. This was stopped by the protest of the people and 



CORPORATE CURRENCY 253 

the act of Congress February 4, 1868, after $44,000,000 of 
the people's "war money" had thus been burned up. The 
bank note circulation of course increased as Government 
currency was destroyed. June 30, 1864, there was $146,- 
406,725 bank note currency outstanding, having increased 
from $31,235,270 the previous year; the first being issued 
on December 21, 1863. But on June 30, 1868, there was 
$300>S4S>392 of bank note currency. 

Government currency remained the same until after the 
panic of 1873 when popular demand forced the Government 
to reissue $26,000,000 of the cancelled greenbacks, making 
the total outstanding $328,000,000. Growth of business in- 
creased bank note circulation (while Government currency 
remained stationary) from $300,545,392 in 1868 to $354,- 
408,008 in 1875. The reissue of $26,000,000 Government 
currency helped reduce the demand for bank note currency 
and in 1877 ^^^^ note currency fell to $317,048,872. Bank 
currency fluctuated slightly during the next eight years 
(Government currency remaining the same), to $319,069,- 
932 in 1885. In 1886 an era of great general prosperity 
set in and continued until the panic of 1893. The demand 
for bank credit grew amazingly. Banks could by law sell 
credit for four to ten times the volimie of the "lawful 
money," gold, silver or Government currency, in their re- 
serves. Bank note currency cannot be counted as part of 
bank cash reserves. Banks began to contract bank note 
currency, selling their Government bonds for "lawful 
money" to put in their cash reserves to enable them to in- 
crease their credit loans four to ten times such increase of 
cash reserves. 

A bank, for example, could make more charging 6 per 
cent for $10,000 bank "credit" issued based on $1,000 of 
"lawful money," Government money, held in its reserve 
than it could by investing that $1,000 in a $1,000 U. S. 
bond, depositing it with the Government and getting $1,000 
bank note currency that it could not hold as "cash reserve" 
because not "lawful money" and could not use as a basis 
for increasing its loans of "credit." 

It got the 2 per cent interest on the U. S. bond deposited 
as security, and say 6 per cent for use of the $1,000 bank 
note currency needed by some customer to meet a pay roll 
in cash, less i per cent tax on the currency paid to the Gov- 
ernment. 

But by selling the bond for "lawful money" and holding 



^54 UNITED STATES MONEY vs. 

the $1,000 in its "cash reserve'' it could increase its loans 
of credit $10,000 at 6 per cent without investing an extra 
dollar. 

This contracting of bank currency was further acceler- 
ated during this period by the decrease in the supply of 
bonds by payment of large portions of the public debt, the 
whole bank currency system proving then, as it always has 
been, inelastic and unresponsive to tiie fluctuating demands 
of business. In fact, the bank currency system should have 
been abolished after the Civil War and a system of elastic 
sound Government currency put it its place. Congress in 
1888 authorized use of a large surplus for buying at a 
premium unmatured Government bonds. This premium 
tempted banks to sell bonds and contract bank currency 
based thereon because it was temporarily more profitable. 

By June 30, 1890, bank-note currency had been thus con- 
tracted to $185,970,775 from $252,362,321 in 1888, $309,- 
010,460 in 1886, $319,069,932 in 1885, and $358,742,034 in 
1882, the highest year between 1864 and 1902. In 1891, 
bahk-note currency had been contracted to $167,921,574. 
Thus as business and the demand for currency increased 
the banks actually decreased the supply, because they could 
make more profit doing so. 

This shrinkage in the quantity of available currency 
tended to force people to do business less on a cash basis 
and more by check, bank credit, which further increased 
bank profits. 

Senator John Sherman, that great Ohio statesman and 
financial authority, undertook to relieve the people of their 
increasing, shortage of currency. If the banks would not 
supply bank-note currency because it was more profitable 
to do otherwise just then, it was necessary to increase 
the quantity of Government currency. 

Sherman saw that the banks would not allow Congress 
to increase the volume of greenbacks because for twenty- 
five years the banks had been trying to get all greenbacks 
destroyed. 

The banks for their own greater profit had contracted 
bank currency, and the volume of available money, over 
$150,000,000. If the banks had not objected, this shrink- 
age could have been replaced with United States notes, 
greenbacks, with a total cost to the Government of but 
perhaps $1,000, the cost of printing the money, and the 
notes, being the obligation of the Government, would have 



CORPORATE CURRENCY 255 

been as sound as Government bonds, which are nothing 
more than the obligation of the Govemiment. 

But the banks objected to any increase of the greenbacks, 
so the Sherman silver purchasing act of July 14, 1890, was 
passed. This authorized the Government to buy 4,500,000 
ounces of fine silver at the market price each month and to 
issue "Treasury notes" redeemable on demand in "coin" to 
pay for the same. These notes were made full leg^l-tender, 
"lawful money." At a cost to the Government of $155,- 
931,002, for which Treasury notes were issued, 168,674,- 
682.53 fine ounces of silver were purchased. 

The banks did not at first object because they needed for 
themselves more "lawful money," legal-tender money, to put 
in their reserves so they could inflate their loans of credit 
tenfold. And if the banks got hold of the whole $155,- 
931,002 of these silver "Treasury notes" and held same in 
their cash reserves it would increase the loaning power of 
the banks $1,500,000,000, on which they would get 6 per 
cent, or other going rate, and the entire extra investment of 
the banks would be the $155,000,000 paid for such "lawful 
money," Government currency. 

Gold Standard and Free Silver Campaigns. 

The banks make their money chiefly selling or loaning 
credit They are interested in having as much credit and 
as little money used as possible. Therefore they do not want 
the Government to issue money that they can neither profit 
from or control the supply of. It is largely immaterial to 
banks whether the country has a double monetary standard 
or a single gold standard, for they know either would be 
sound so long as the Government guarantees every dollar 
issued. 

The big Wall Street men, on the other hand, usually do 
not sell credit. They are private bankers, not national or 
state bankers, although in recent years they have become 
more largely interested in such banks. - But their chief 
business is selling bonds, the bonds of governments, states, 
coimties, cities, districts, railroads and other corporations. 
Their best clients are the individual and corporate owners 
of the great fixed income or bond wealth of the worlds 
largely in Europe, such as the Rothschilds. 

The owners of such wealth for a half century have been 
striving to get every nation to adopt the single gold stand- 
ard. They expected that in time the reserves of gold ore 
in the mines and the new discoveries would grow less. 



356 UNITED STATES MONEY vs. 

They realized that with their wealth invested in bonds 
payable in gold coin, if the output of gpld should decrease 
half, automatically that would double the value of their 
bonds and wealth measured in other securities, property or 
labor. Or if the gold output remained the same but gp-owth 
of the world's business should double the demand for gold 
for Government reserves, and other uses, likewise that 
would double their fortunes without any extra investment. 
Of course they did not expect that Providence would turn 
their success into defeat by doubling the world's gold pro- 
duction. The world's gold output was, in ounces: 6,250,- 
000 in 1870, 5,540,000 in 1880, 5470,000 in 1890, 12,315,- 
000 in 1900, 18,268,000 in 1905, 22,058,000 in 1910. United 
States gold production, ounces: 2,418,000 in 1870, 1,741,- 
000 in 1880, 1,588,000 in 1890, 3,829,000 in 1900, 4,265,000 
in 1905, 4,646,000 in 1910. 

The world's silver production, ounces: 43,000,000 in 
1870, 78,600,000 in 1880, 109,000,000 in 1890, 173,591,- 
873 in 1900, 217,838,695 in 1910. United States silver, 
ounces: 12,375,000 in 1870, 30,318,000 in 1880, 54,516,000 
in 1890, 56,647,000 in 1900, 56,438,695 in 191 o. 

Because of the unexpected doubling of the world's gold 
production, the bondholders failed to double the value of 
their bonds as they expected, either througji shrinkage in the 
supply or increase in the demand for gold, but by demone- 
tizing silver and reducing by half the basic metallic standard, 
making gold alone the measure of value, the bondholders 
prevented the purchasing power of their incomes from gold 
bonds decreasing, or the value of securities, property and 
labor measured in gold increasing to the extent that would 
have taken place if silver as well as gold had remained 
standard or a legal measure of value. 

The high financiers of Wall Street, at the instance of their 
best foreign customers, the Rothschilds and others, in 1892 
undertocJc to demonetize silver and get Congress to estab- 
lish permanently in the law the single gold standard. It 
was rumored that the job complete cost the "interests'* about 
$40,000,000. The resulting panic, however, cost the people 
many billions of dollars by way of losses. The first thing 
(as usual, and as now has been done to promote the central 
bank scheme) was to form a great offensive and defensive 
alliance with the banks of the country. The banks com- 
prised an invincible political machine with branches in every 
community throughout the country, with influential and 



CORPORATE CURRENCY 257 

shrewd men in control, and with unlimited power due to 
ability to apply financial pressure upon the business of every 
man and corporation in the United States. Considering 
the object, it was not an alliance but a conspiracy. And if 
the exact truth ever could be revealed, just what was done 
behind the scenes from 1892 to 1900, it would cause the 
country to stand aghast and shudder that such things could 
be done in this "Year of Our Lord," in the midst of civiliza- 
tion, by such men and so many of them, and solely for 
sordid gain, for profit. 

It was easy for Wall Street to show the banks that to 
continue issuing Treasury notes to pay for silver bought 
at the rate of $2,000,000 to $4,000,000 per month, under 
the "Sherman law" of July 14, 1890, in time would put 
afloat so much Government money that it might cause the 
permanent retirement of all bank-note currency and give 
the people so much actual money that they would do 
business more upon a cash basis, thus reducing the demand 
for bank loans of credit And it also was easy to show that 
while the gold standard might not directly benefit the banks 
in any way it in no way would harm them. 

The banks needed the wonderful political and legislative 
skill and liberal campaign contributions of Wall Street to 
stop the increasing of the volume of Government currency. 
So the alliance, the conspiracy formed was natural, logical, 
each having a different end to attain through action by Con- 
gress and approval by the President, and both Wall Street 
and the banks would share in the advantages and profits 
realized by their joint political raid. 

The first successful undertaking of the allies was to defeat 
President Harrison and the Republican party in 1892 for 
paying instead of extending United States bonds and for 
passing the Sherman act in 1890, and elect Grover Qeve- 
land president and a Congress containing enough repre- 
sentatives and senators. Republicans and Democrats, of a 
kind that could be steered by the banks and Wall Street 
to insure the repeal of the purchasing clause of the Sher- 
man silver act of 1890 and the passage of a law establishing 
the single gold standard. The tariff was a sham issue 
used to hide the real issue in 1892 and will be in 19 12 if 
the people will allow themselves to be again fooled by the 
same old game. The banks decided the election in 1892 
and expect to do the same in 1912. 

Cleveland was inaugurated March 4, 1893. Up to that 



258 UNITED STATES MONEY vs. 

time there was not a single threatening cloud in the finan- 
cial or business sky. There was no panic, or thought of 
panic by anyone outside of Wall Street and the very few 
big banks "on the inside" and "wise" to the moves con- 
templated. Business conditions never had been better or 
more sound, or general prosperity more real and justified 
in the entire history of the United States. Bank clear- 
ings had increased between 1883 and 1891 from thirty-six 
to fifty-six billions of dollars. Qeveland called a special 
session of Congress and demanded repeal of the Sherman 
act. He of course knew that the panic or financial disaster 
that came in the midst of prevailing prosperity was not due 
to the Shermar^ act increasing the supply of Government 
money, but to the deliberate and wicked act of Wall Street 
and the banks inflicting upon the country an awful panic 
to frighten and drive the distressed and terrified people like 
cattle into hastily forcing Congress to do the will of the 
criminal conspirators who caused the panic of 1893. 

1893 Panic Was Bank-Made? 

An article in Pearson's Magazine for March, 1912, by 
Allan L. Benson, makes public alleged important additional 
data designed to further prove that the banks deliberately 
caused the panic of 1893 for legislative purposes. It gives 
the following as a mandatory circular letter to all the banks 
alleged to have been sent by the National Bankers' Asso- 
ciation on March 12, 1893, eight days after Cleveland was 
inaugurated : 

"Dear Sir: — ^The interests of national bankers require 
immediate financial legislation by Congress. Silver, silver 
certificates and Treasury notes must be retired and the na- 
tional bank notes, upon a gold basis, made the only money. 
This requires the authorization of $500,000,000 to $1,000,- 
000,000 of new bonds as a basis of circulation. You xvill 
at once retire one-third of your circulation and call in one- 
half of your loans. Be careful to make a money stringency 
felt among your patrons, especially among influential busi- 
ness men. Advocate an extra session of Congress for the 
repeal of the purchase clause of the Sherman law ; and act 
with other banks of your city in securing a large petition 
to Congress for its unconditional repeal, as per accompany- 
ing form. Use personal influence with congressmen, and 
particularly let your wishes be known to your senators. 
The future life of national banks as fixed and safe invest- 



CORPORATE CURRENCY 259 

ments depends upon immediate action, as there is an in- 
creasing sentiment in favor of governmental legal tender 
notes and silver coinage." 

Such a "round robin" circular would cause a panic any- 
time. Every banker knows that fact. Nothing could be 
more heartless and criminal. Any man who would send 
out or follow the instructions of such an order deserves to 
be court-martialed and shot as a public enemy. The panic 
of 1893 caused every kind of crime to be committed by 
thousands who but for the panic would have remained 
good and useful citizens. 

Congress should immediately pass a penal statute making 
it a felony punishable by both fine and imprisonment any 
co-operative contracting of loans by national banks for the 
purpose of influencing legislation or the political actions of 
borrowers or causing panic or financial stringency. 

In his message to the special session of Congress Presi- 
dent Cleveland said: 

"Our unfortunate financial plight is not the result of 
untoward events, or of conditions related to our national 
resources ; nor is it traceable to any of the afflictions which 
frequently check national growth and prosperity. With 
plenteous crops, with abundant promise of remunerative 
production and manufacture, with unusual invitation to 
safe investment, and with satisfactory assurance of busi- 
ness enterprise, suddenly financial distress and fear have 
sprung up on every side." 

Thus we have the highest evidence that there was no 
natural reason for panic, and that, therefore, the panic was 
wholly artificial, created. 

With several thousand banks alleged to be secretly con- 
tracting their bank-note currencjr, robbing the people of their 
daily money supply, and putting the screws on business 
men everywhere by forcing them unexpectedly to slaughter 
securities, commodities and other property to pay up bank 
loans to an amount - aggregating billions of dollars, of 
course "suddenly financial distrust and fear have sprung 
up on every side." And co-operative calling of loans is 
the only thing under the conditions then prevailing that 
could have caused the "financial distrust and fear," and the 
resulting panic. 

Later in this chapter is shown just how the banks tried 
to execute the alleged order to increase the bonded debt 
of the Government another billion dollars. 



36o UNITED STATES MONEY vs. 

Mr. Benson quotes an alleged article in the July, 1895, 
Forum, by William Solomon, a member of the great Wall 
Street international banking house of Speyer & G>. to the 
effect that Cleveland was elected by the "special interests*' 
on tariff reform as a sham issue, the concealed but real 
issue being the stopping of the issuing of Government cur- 
rency and repeal of tiie Sherman silver law, and that the 
panic was to be an "object lesson" to force the people to 
make Congress repeal that law, and that a special session 
was called and did the job according to the prearranged 
program. Congress was overwhelmingly against repeal, 
but the awful pressure of the panic and the banks on the 
people compelled them at last to drive Congress into sur- 
rendering to the banks and Wall Street. And right now 
it is believed that the banks and Wall Street are preparing 
to do the same thing in the same way to drive through Con- 
gress the Aldrich scheme that is a thousand times more 
important to Wall Street and the banks than was the repeal 
of the silver-purchasing act* In the campaign of 1912 the 
tariff is to be the nominal, the sham issue, the real but con- 
cealed issue being the Aldrich plan, which is to be forced 
through Congress before March 4, 1913, if the President 
is defeated in this convention or election. 

If panic comes, the banks will cause it. If they do, the 
people will make short work of the banks. They may 
organize a general depositors' "strike" and all transfer their 
deposits from the national to the state banks and trust com- 
panies. If national banks conspire to inflict upon the 
country the horrors of general panic. Congress is likely to 
seriously consider a repeal of the National-Bank act, for- 
feiting the charters of every bank shown to have violated 
the law (and 59 per cent of the entire 7,331 banks are 
guilty), and the creation of a genuine Government bank 
with branches in every city to receive the deposits of the 
people, issue the currency and supply bank credit for busi- 
ness. Such a course is not desirable, but it is preferable 
to a continuance of the present Bank- Wall Street despot- 
ism and the fiendish panics they cause for their selfish pur- 
poses. 

Co-operative calling of bank loans operates directly to 
restrain trade and interstate commerce. It is a violation 
of the anti-trust law, a crime with fine and imprisonment 
as the penalty. If the banks in concert contract loans and 
cause panic, or even a stringency, the people will not stop 



CORPORATE CURRENCY 261 

tinta the jails are filled with bankers in prison stripes. Arti- 
ficial panic is war, and hereafter if the banks again declare 
panic the fighting may not all be on one side. 

Senator &ivid B. Hill of New York, a conservative but 
courageous patriot, in a speech in the United States Sen- 
ate on August 25, 1893, said : 

"They (the bankers) inaugurated the policy of refusing 
loans to the people, even upon the best security, and at- 
tempted in every way to spread disaster throughout the 
land. These disturbers — these "promoters of the public 
peril — ^represent largely the creditor class, the men who de- 
sire to appreciate the gold dollar in order to subserve their 
own selfish interests; men who revel in hard times; men 
who drive harsh bargains with their fellow men regardless 
of financial distress, and men wholly unfamiliar with the 
principles of monetary science." 

This indictment was true in 1893 ^^^ ^^ ^s true in 1912. 
If the banks by circular letter were now ordered to "at 
once retire one-third of your circulation (bank currency) 
and call in one-half of your loans," and did so, it would 
take out of circulation among the people $250,000,000 of 
currency and force business torrowers to immediately pay 
up bank loans to a total of more than ten billion dollars. 
It would put almost every business man and 95 per cent of 
all corporations into bankruptcy. 

One of the chief objects of the Aldrich plan is to be 
able to avoid the dangerous practice of sending broadcast 
t© all the banks even a secret circular letter ordering gen- 
eral contraction of currency and loans. 

The National Reserve Association will be able to force 
banks to contract bank loans, say $5,000,000,000, simply by 
secretly contracting its corporate currency $500,000,000, 
thus shrinking the legal reserves of the banks and forcing 
the reduction of loans ten times as much. If $500,000,000 
of corporate currency is taken away from the people and 
cancelled, the people will withdraw $500,000,000 from the 
banks for their daily pocket use. This reduces the legal 
cash reserves of the banks $500,000,000 and forces the 
banks to call in $5,ooo,ooo/xx) of credit loans. That will 
cause panic, wredk prices and raise interest rates, the chief 
objects sought by Wall Street through the Aldrich plan. 

There is reason to believe that the panic of 1873 was 
caused by the same interests to force through Congress the 
bills for the resumption of specie payments and the de- 



^2 UNITED STATES MONEY vs. 

struction of the remaining greenbacks. And that the panic 
of President Jackson's day was caused to punish him and 
the country for atK>lishing the central bank. 

There is increasing general belief that the panic of 1907 
was wholly artificial. It also came in the midst of the 
greatest industrial and financial prosperity the nation ever 
experienced. It is conceded that there was no natural rea- 
son for a panic. Yet it came out of a clear sky, and caught 
everybody but the big insiders, who months before had 
quietly unloaded hundreds of millions of securities on the 
people at high prices and kept the proceeds as ready cash 
which they later used in the midst of the panic they them- 
selves had helped to create or intensify to buy bade from 
the stricken public the same securities at half price. 

The panic came in October, 1907, after Wall Street, on 
October 4, 1906, at a meeting of bankers and others, had 
decided to put through Congress a measure creating a cen- 
tral bank to issue and control the entire public currency, 
and just before the opening of the session of Congress in 
December, 1907, in which the central bank bill was promptly 
introduced. 

It is American history, the fact that every great panic 
has immediately preceded a very great joint effort by Wall 
Street and the big banks to put through Congress legisla- 
tion vastly increasing the profits and power of the banks 
and Wall Street. This historic fact, and knowledge that 
the interests, if they desire, easily can cause a serious panic 
through the Stock Exchange and by instigating runs on 
banks any day on an hour's notice, whatever the general 
conditions may be, and belief that they will not hesitate to 
do so if necessary to drive the people into forcing Congress 
to hastily adopt the Aldrich plan for the creation of a huge 
private money trust, impells this warning to the country 
to "keep near shore" financially and out of the clutches 
of the banks until Wall Street and the banks get what they 
want or are completely beaten in the impending struggle 
by the people. It is likely to be a finish fight with no quar- 
ter asked or granted by either side. 

Right now every natural condition would justify expan- 
sion and steady increase of business. Banks have an abun- 
dance of money and rates are4ow. Yet things drag. Every- 
one knows something is the\natter, but most people at- 
tribute it to the wrong causes. pThe fact is that Wall Street 
and the banks are holding thingsr. back by main force. They 



CORPORATE CURRENCY 263 

are beginning to tighten the financial screws. There is 
plenty of money and credit but banks arbitrarily refuse to 
loan it generally to the extent necessary to cause proper 
resumption of business. So long as they can keep people 
grumbling, complaining, they have a better chance to steer 
them into supporting the new and revolutionary Aldrich 
plan, when they are told that such plan adopted by Con- 
gress positively is the only way to "reform" the situation 
and revive business. Then the banks may think, possibly, 
that it may be necessary to cause another panic or semi- 
panic to force the Aldrich plan through Congress, and no 
doubt they consider it best not to be too much spread out. 

Before March 4, 1893, the big interests were quietly get- 
ting ready for the coming panic that no one else even 
dreamed of. Soon after that date in diffei^ent parts of the 
country, certain banks are said to have begun to apply the 
pressure on customers. They are alleged to have explained 
as the reason that the existence of the Sherman act of 
July 14, 1890, on the statute books threatened the stability 
of the entire financial system and that if Congress did not 
quickly repeal it there might be runs on banks, bank fail- 
ures and possibly a great panic, or words to that effect. 
This was enough to send customers who needed new bank 
accommodations or to renew maturing paper post-haste to 
the local congressman or the senator with the imperative 
demand that such "public servant" at once get to work to 
avert the impending panic by repealing the silver purchas- 
ing clause of the Sherman act. The scheme seems to have 
worked, Qeveland called an extra session of Congress and 
the bill was passed and on November i, 1893, was approved. 

The banks perhaps did not intend to have a real panic, 
at least not one so severe. They probably intended only 
to threaten panic and force action by Congress and then let 
things quiet down and go on as before. Wall Street, how- 
ever, knew from its experience with the panic of 1873 ^^^ 
before the Civil War that they were playing with fire ; that 
when influential bankers and financiers predict panic the 
people are likely to take them seriously and do the very 
things certain to cause a real panic ; that is, they withdraw 
and hoard deposits, which forces banks to call in their 
loatis quickly in large volume, and this ill turn causes busi- 
ness men to slaughter goods and prices to get money to 
pay up bank loans, wrecking all prices and values, closing 
factories, plunging workmen by thousands into idleness and 



^ UNITED STATES MONEY vs. 

their families into distress and poverty, in fact causing gen* 
€ral demoralization, panic, ruin. 

That is just what happened in 1893. Wall Street ex- 
I>ected it and was ready with actual cash to buy in at nom- 
inal prices what the public was forced by the panic to 
sacrifice. 

The banks got their share of the plunder, the repeal of 
the silver purchasing clause, and increase of Govemtnent 
currency was stopped. But Wall Street had to wait for its 
share, the gold standard. The banks, however, were loyal 
to the conspiracy. They stood with Wall Street in the cam- 
paign of 1896, and on March 14, 1900, Wall Street and its 
foreign bond-holding clients got their share of the plunder, 
the adoption by Congress of the single gold standard. 

Writer is not hereby attacking the gold standard or 
advocating its repeal. That law is an accomplished fact. 
Nor is he favoring free and unlimited coinage of silver at 
sixteen to one. He is a republican, and never believed free 
silver coinage to be the proper remedy. But he is trying 
plainly to state without political bias certain historic facts 
and seemingly fair deductions of great significance because 
such facts have a most important bearing tending to reveal 
the true character and methods of the national banking 
system and Wall Street and throw a flood of needed light 
upon the present attempt of these interests to still further 
increase their profits and power at the expense of the 
people. 

'"Joker" in Law Gives Millions to Banks. 

To pay the banks full measure for their truly great and 
unanimous political and lobbying efforts, scHne additional 
*'good things" were slipped into that gold standard act of 
March 14, 1900. For instance, banks thereafter were al- 
lowed to take out 100 per cent instead of 90 per cent of 
bank note currency on the U. S. bonds deposited with the 
Government as security for bank note circulation. Thus, 
without investing a dollar or putting up any additional 
security, the banks were given 10 per cent more currency 
that they could loan to the people at 6 per cent. The next 
year, on June 30, 1901, the bank currency increased to 
$353,742,186. Ten per cent of this, representing the in- 
crease from 90 per cent to 100 per cent (currency equal 
to the face of the bonds), is $35,374,218. This the b^iks 
loaned to the people at 6 per cent per annum. After pay- 



CORPORATE CURRENCY 265 

ing the I per cent Government tax on the currency, to cover 
expense of printing same, etc., the banks realized say 5 
per cent, or an extra net profit that year of $1,768,710. The 
bank currency doubled in ten years, and there was out- 
standing Octdber 31, 1911, $744,071,715. Ten per cent of 
this (the difference between 90 per cent and 100 per cent) 
is $74407,171. Five per cent on this 10 per cent of excess 
currency yielded the banks last year without $1 of extra 
investment, or additional deposit of securities, increased 
net profits amounting to $3,720,358. This was enough to 
pay an extra annual dividend of one-third of i per cent 
on the entire capital stock ($1,032,632,135) of all the na- 
tional banks in the United States. Adding the extra profit 
of 1901, $1,768,710, to that of 191 1, $3,720,358, and divid- 
ing the total, $5489,069, by two we find that $2,744,534 is 
the average yearly extra net profit derived by the banks 
from that simple little ''Joktr'* inserted in the gold standard 
act of March 14, 1900, handled with his usual cleverness 
by that renowned "reformer," Senator Aldrich, as chair- 
man of the Senate Finance Committee. Therefore, in the 
ten years, 1901 to 191 1, the confederated banks have re- 
ceived as a free gift by act of Congress $27445,340. That 
was a quid pro quo and a half, for the banks. No wonder 
the campaign funds of 1896 and 1900 were ample and the 
patriotic zeal of the banks sufficient to insure a political 
result that would make it possible for the banks to harvest 
these manifest blessings by means of a grant in due form 
passed by Congress and signed by the president. If the 
banks subscribed to campaign funds with the understand- 
ing that this law would be passed, in effect it was a grant 
from the public Treasury for political purposes. 

Before 1900, after getting 2 per cent interest on the U. S. 
bonds deposited as security and 6 per cent for the use of 
the 90 per cent of currency obtained thereon, and deducting 
the I per cent Government tax on the currency and other 
expenses, the banks realized an extra net profit beyond 6 
per cent for their money of between J4 and i per cent. 
Under the old law they would have realized a profit of 
$6^200,588 from issuing $744,071,710 of bank currency, 
But, according to the comptroller's report, they realized, be- 
cause of the change by the law of 1900, about $9,920,946, 
or 154 per cent profit, an increase of $3,720,358, or 60 
per cent in the net profits of the associated national banks 
from issuing bank note currency, and this without any 



266 UNITED STATES MONEY vs. 

extra cost or investment by the banks or the slightest 
benefit to the people or the Government. 

The above $27445,340 shows only the extra profit of the 
banks in ten years without extra investment. But the extra 
inducement of 100 per cent instead of 90 per cent of cur- 
rency given on deposited U. S. bonds caused the banks to 
increase bank currency from $353,742,186 in 1901 to $744,- 
071,715 in 191 1, a gain of $390,390,529. The ordinary 
profit above 6 per cent on this gain in ten years was about 
$14,637,360. This added to the $27445,340, the extra 
profit in the ten years due to increase from 90 per cent to 
100 per cent of currency, makes a total of $42,082,700 extra 
profit realized in ten years by the banks over and above 
6 per cent for their money, as the direct result of the law of 
1900, or an average of $4,208,270 each year. 

But that was not all of the "good things" for the banks in 
the "gold standard" act of March 14, 1900. 

United States notes, and Treasury notes, were handi- 
capped as against bank currency by the requirement that 
the Government should spend $150,000,000 for gold to be 
held permanently to "secure" or redeem such Government 
currency. To maintain such gold reserve the Secretary of 
the Treasury was authorized, and when necessary required, 
to issue Government bonds bearing interest not more than 
3 per cent and payable, principal and interest, in gold coin, 
to buy gold to replenish such gold reserve. No limit as to 
the amount of such bonds that can be issued was fixed, and 
the Government has no option but must issue bonds when- 
ever the gold reserve falls below $100,000,000 and cannot 
be otherwise replenished* The famous Government bond 
trap is now set. In Cleveland's time the Government was 
run in debt arbitrarily more than a quarter of a billion dol- 
lars by the gold gamblers of Wall Street with the aid of the 
banks by use of the "endless chain" employed to repeatedly 
abstract the gold from the reserves of the Federal Treas- 
ury. By the act of 1900 the proceeding is made lawful and 
issuance of bonds made mandatory on the Government 

At the right future time we shall see a renewal of raids 
on the Treasury gold reserves for the purpose of again 
forcing the issuance of Government bonds. This will be 
done whenever the banks need more bonds to deposit to 
enable them to still further increase their bank currency. 
And to prepare for this coming event, the act of 1900 re- 
pealed the old restrictions on tiie banks and tiiey now can 



CORPORATE CURRENCY 267 

issue bank currency equal to their total capital stock, or 
more than one billion of dollars. 

There have been many times since the Civil War when 
it was a problem to dispose of vast surplus revenues accumu- 
lated in excess of expenditures by the Government. It 
would have been possible long ago to have paid off with 
such excess revenues the entire balance of the oustand- 
ing bonds of the United States, amounting on October 31, 
191 1, to $963,349,390, only the banks would not permit 
this to be done. The banks now own about 90 per cent 
of all these Government bonds. If the Government had 
thus paid all its bonds and got out of debt, and stopped 
all annual interest expenses, as it could and should have 
done, that would have forced the retirement of the entire 
bank-note currency based on such bonds deposited as se- 
curity, amounting on October 31, 191 1, to $744,071,710, 
and the substitution in its place of a Government currency 
that would not yield rich profits to the banks every year 
as does the bank currency. So the Government is kept 
in debt nearly a billion dollars and forced to pay over 
$20,000,000 bond interest each year, a total unnecessary 
interest cost since the civil war about equal to the entire 
present bonded indebtedness of the United States, for no 
other reason than to enable the national banks to make a 
currency graft off the people amounting to less than ten 
million dollars annually. And to enable this bank grab. 
Congress all these years has had to resort to all manner of 
reckless extravagance to spend the surplus revenues; so 
much so that Senator Aldrich himself publicly declared that 
a proper and business-like administration of the Govern- 
ment would reduce expenditures $300,000,000 annually. 
This would have been done years ago but for the intrigue 
in Congress by the banks and the manipulations of Senator 
Aldrich. Four years of such saving would have wiped 
out the entire national debt and enough over to create a 
permanent fund which, invested at 5 per cent, would have 
provided a continuous annual pension of $10,000,000 for 
the banks, or more than they realize from the currency 
privilege. And it would save the Government every year 
more than $20,000,000 now paid out for interest on bonds. 

The U. S. bonded debt was reduced from $1,797,643,700 
in 1879 to $1,021,693,350 in 1887 and $585,029,330 in 1892. 
From 1888 to 1892 $235,000,000 surplus was expended buy- 
ing up bonds not yet due, the price going as high as 130 on 



268 UNITED STATES MONEY vs. 

the market. This was during Harrison's administratiOD. 
It was business-like to use surplus revenues to extinguish 
the interest bearing debt, thus returning vast sums of money 
to the channels of trade. It then looked as though Uncle 
Sam soon would be out of debt. But the big banks ran the 
price up and forced the Government to pay a bonus of about 
$300,000 for each $1,000,000 of bonds to get the surplus 
back into circulation. March i, 1889, the surplus, over 
and above the $100,000,000 gold reserve, was $230,348,- 
916.12. Payments for bonds and other things reduced this 
to $62450,575.18 on March 4, 1893, when Cleveland was 
inaugurated. The gold raid began immediately. The 
banks gathered up greenbacks and presented them to the 
Treasury, demanding gold. In sixty days they had reduced 
the gold reserve below the $100,000,000 minimum. The 
Government issued $50,000,000 of bonds, dated February i, 

1894, and thus got back this withdrawn gold. The banks 
then gathered up more greenbacks and again took that 
same gold away from the Government, forcing the issuance 
of another $50,000,000 of bonds in November, 1894, to get 
it back into the treasury. These were 5 per cent lo-year 
bonds. The banks kept on raiding the Government's gold, 
forcing two more bond issues, $452,315400 in February, 

1895, and $100,000,000 in January, 1896. Thus the banks 
forced the Government to increase its bonded debt $262,- 
315,400, and at the end the Government had but little more 
gold than at the beginning, but it had an unneeded and in- 
jurious surplus (on March i, 1897) of $157,213,632.08, 
besides the $100,000,000 gold reserve. The banks would 
have kept right on, only Secretary Manning got disgusted 
and told the banks if they kept raiding for gold he would 
give them silver. That stopped the gold raid and the 
issuing of bonds. 

The banks forced the Government to pay several million 
dollars as a bonus in buying unmatured Government bonds 
between 1889 and 1893 *o get rid of an injurious surplus 
of (1889) $230,348,916, and between 1893 ^^^ 1896 by 
raiding the gold reserve the banks forced the Government 
to accumulate an injurious surplus (1897) of $157,313,6^ 
by selling $262,315400 of high-interest, long-time U. 
bonds. 

The act of March 14, 1900, provided for the refundii^, 
instead of payment, of maturing U. S. bonds, the new bonds 
to be payable in not less than thirty years. This reversed 



CORPORATE CURRENCY ^ 

the regular policy of the Government, whkh had been to 
either pay maturing bonds or to Lssue bonds redeemable at 
the pleasure of the Government after some short period. 
Thus the 5-20 bonds issued during the war were made 
redeemable at any time after five years, but payable at the 
end of twenty years. Under this system the Treasury 
could use its surplus revenues to pay off bonds at par in- 
stead of buying tiiem in the market at a ruinous premium, 
and the money would thus be restored to the channels of 
business as promptly as though deposited in the banks with- 
out interest, although the banks would not make so much 
profit. As the chief object of maintaining Government, ac- 
cording to the above official facts, seems to be to legislate 
profits out of the pockets of the f>eople and into the banks 
the plan least advantageous to the Government and most 
profitable to the banks, of course, was adopted by the "pub- 
lic servants," republicans and democrats, in Congress who 
were trained to sneeze every time Aldrich took snuflf. 

March i, 1901, the net surplus was $229,196,337.90. 
Much of this could and should have been used to pay ma- 
turing bonds. But the bonds were refunded into thirty- 
year bonds and the surplus turned over to the banks for 
their use absolutely free, increasing their loaning power 
more than a billion dollars and their possible annual profits 
$60,000,000, without one cent of cost to the banks. 

The maturing bonds were to be due in 1904, 1907 and 
1908. The law of 1900 voted a bonus of about one-fourth 
of I per cent per annum from 1900 until due on these 
bonds. That sounds small, but on the nearly $550,000,000 
of public debt quickly refunded the Government paid out of 
the public treasury a bonus of nearly $50,000,000 on the 
old bonds and received less than $2,000,000 as a premium 
on the new bonds. This enormous sum was a direct gift 
to the banks, as they owned about 90 per cent of the bonds. 

The Treasury report of 1904 shows this refunding opera- 
tion and claims a net profit of $14,245,851 for the Govern- 
ment. But in making the computation $257,837,642 of in- 
terest the Government must pay on the new bonds before 
their maturity and after the expiration of the old bonds is 
ignored. Deducting the $14,245,851 of apparent profit 
from the $257,837,642 interest to become due and we get 
some idea of the net loss to the Government. When the 
panic of 1907 occurred the Government had a surplus of 



270 UNITED STATES MONEY vs. 

$240,cxx>,oo6, or nearly enough to have paid half of the 
principal of the bonds so coming due and refunded. 

The unre funded portion of the bonds maturing July i, 
1907, instead of being paid, $50,000,000 of the bonds were 
extended for twenty-three years at 2 per cent, and the 
money in the big surplus that might easily have been em- 
ployed in paying the public debt was deposited in the banks 
without interest. This $50,000,000 left in the cash reserves 
of the banks enabled the banks to increase their loans of 
credit nearly a half billion dollars on which the banks got 
6 per cent, or other going rate. To enable the banks to use 
that public money the Government was obligated to pay 
$^,000,000 interest before another opportunity to pay those 
$50,000,000 of bonds would arrive. July i, 1907, was a 
time of great prosperity, with no panic in sight or expected. 
Fifty million dollars to pay those matured bonds would 
have only slightly reduced the great $240,000,000 surplus, 
but it would have saved the Government $23,000,000 of 
future interest expense. 

The only excuse offered was that if the bonds were paid 
the banks would not have enough bonds to keep their bank 
currency up to the profitable volume then enjoyed by the 
banks. Since the Act of 1900 the Government through 
refunding operations has actually been saddled with interest 
obligations from which it cannot escape, and which was 
unnecessary, amounting to nearly $300,000,000, for no other 
reason than to enable the national banks to keep afloat 
about $700,000,000 of bank-note currency from which the 
banks derive a net profit of about $10,000,000 annually. 

Is it not high time to drive the national banks out of the 
Government's business, pay off our national debt, abolish 
the bank currency and issue in its place full legal tender 
Government currency, backed by the Government and an 
adequate reserve of gold ? 

No wonder the banks are anxious always to have a 
friendly Secretary of the Treasury as well as Comptroller 
appointed by the President. Do they sometimes bargain 
for this in advance in exchange for their political support? 
The origin and history of the national banking system im- 
pels the belief that if such a political bargain is not made 
it is not the fault of the profit-grabbing, l^slation-pro- 
moting banks. 

The act of March 14, 1900, was indeed a "gold mine" for 
the banks. It contained another provision highly valuable 



CORPORATE CURRENCY 271 

for banks. It legalized counting of "gold certificates'* as 
part of the cash reserves of banks. Gold certificates are not 
"lawful money*' because not legal-tender. Therefore, up 
to 1900 they could not be counted as "cash reserve of lawful 
money." There is no reason why they should not be con- 
sidered "cash reserve." Every dollar of gold certificates 
is secured by a dollar's worth of gold held in the Treasury. 
But likewise there is no reason why gold certificates should 
not be made full legal tender so they could be used by the 
people for paying any debt. Now, ^ gold certificates are 
mere optional currency that anybody can refuse who cares 
to do so. October 31, 191 1, ^903,367,929 of gold certifi- 
cates were in circulation. The law of 1900 made this good 
money for the banks to hold in their reserves so they could 
loan seven to ten times as much credit based thereon, but it 
did not make it legal-tender so the people could force its 
acceptance when tendered in payment of a debt. The rea- 
son was that banks want to discredit Government currency 
as much as possible to increase the use of bank currency 
and credit that yields profits to the banks. This act of 1900 
has increased the supply of money available for bank re- 
serves nearly a billion dollars and thus has increased the 
possible loaning power of the banks about ten billion dollars. 
Six per cent on the net gain of nine billion dollars shows 
the possible annual extra net profit for banks under this 
"joker." 

The act of March 14, 1900, was amended by the act of 
March 4, 1907. This authorized a contraction of bank cur- 
rency at the rate of $9,000,000 per month. It also reduced 
the tax on bank currency one-half, to half of i per cent 
per annum, when secured by 2 per cent U. S. bonds ; and 
under the refunding clause of the act of 1900 most of the 
bonds already had been converted into 2 per cent bonds by 
the banks. So this was a direct gift to the banks and not 
to induce a lower interest rate on U. S. bonds. 

Assuming that the entire $744,071,710 of bank-note cur- 
rency out October 31, 191 1, was based on 2 pef cent bonds, 
this reduction of the tax was another outright ^ift to the 
banks by act of Congress amounting to an additional net 
profit of $3,720,358 per year without one dollar of extra 
cost, investment or security by the banks and without a cent 
of benefit to the people or the Government. The banks 
found that the steal of 1900, increasing by 10 per cent the 
volume of bank Currency and by 60 per cent the net profits 



27^ UNITED STATES MONEY vs. 

of the banks from currency, worked so well that in 1907 
they tried it again, that time by having their tax to the 
Government on such currency reduced half, or to J4 per 
cent, and their extra profits so won under the law of 1907 
were about the same in amount as those obtained under 
the act of 1900 by the increase from 90 per cent to 100 per 
cent in the quantity of currency obtainable on deposited 
bonds. 

The act of 1907 also made national banks depositories and 
required the Government to deposit public moneys in 
national banks without requiring banks to pay a cent of 
interest on such deposits. J^Iillions upon millions of public 
funds were thus obtained by the banks, and each million of 
lawful money so deposited enatiled the banks with no extra 
investment or cost to increase thejr loans of credit ten mil- 
lion dollars. \ 

During tiie panic of 1907, whichvwas caused by these 
interests seven months after the act olf .March 4, 1907, had 
given them the rich extra profits described above, most of 
the banks repudiated their deposit obli^tions, refused to 
pay on demand. Frightened by the incrtesing danger to 
their own institutions, they appealed to tOT Government, 
begging it to save them from threatening: niin, which the 
Government generously did. N 

The Secretary of the Treasury dumped int^ the banks 
nearly all of the $240,000,000 cash balance in ti?e treasury. 
In fact, at one time the Glovernment had in its V)wn hands 
only a cash balance of $2,000,000, and would nofe have had 
a dollar if certain vouchers executed and due harf. not been 
held up arbitrarily. About $i20,ooo/xx> was tuimed over 
to New York City banks by the Government, increSpising the 
loaning power of such banks more than a half billioA dollars. 
Yet the banks never paid the Government one cent for use 
of this money, for actual salvation, but used much^of it to 
increase the financial ability of inside operators so they 
could acquire cheap the securities the artificial panit forced 
the public to sacrifice. If the Government had not possessed 
that large sum of ready money, or had refused to surrender 
it to the banks, it is likely a majority of all national banks 
would have shut their doors or become legally barWrupt 

And now in return for thus rescuing uie entire banking 
system from danger if not from destruction, and for all these 
rich privileges conferred by the laws of the land, the barrics 
have joined Wall Street in a selfish conspiracy to rob the 



CORPORATE CURRENCY 273 

Government of its constitutional power to issue the public 
currency, that a monopoly of all money and credit may be 
gained by the banks through a single private corporation 
owned by the banks, the ^Jational Reserve Association. 

We now come to the Aldrich emergency currency act of 
May 30j 1908. Senator Aldrich in that bill tried to remove 
the prohibition against contracting bank currency more than 
$9,000,000 per month so as to allow sudden and unlimited 
contraction. He only struck out that provision of his bill 
after it had been exposed by the reading in open Senate of 
a petition signed by writer denouncing the scheme as a 
"joker." If Aldrich had not withdrawn that provision it 
would have been possible suddenly to contract and destroy 
the $700,000,000 bank currency as well as $500,000,000 
emergency currency, a total of $1,200,000,000, or more than 
a third of all money and over half of all in circulation. 
This wide and sudden contraction would force the calling 
of loans by the banks wholesale, demoralize business, wreck 
prices and cause general panic. The present Aldrich plan 
contains this power of unlimited contraction in even more 
dangerous form. 

Aldrich was also forced to eliminate the plan designed 
to make a market for hundreds of millions of railroad bonds, 
specifically, which Wall Street desired to unload on the 
banks at high prices after buying them from the public 
during the panic at low prices. This was to be the entering 
wedge looking to the ultimate substitution of Wall Street- 
made bonds in place of Government bonds as security for 
bank-note currency, which again would have increased the 
net profits of the banks. Said act did authorize the banks, 
affiliated in currency associations, to issue $500,000,000 
additional currency on security other than Government 
bonds for the benefit of banks in emergencies. In fact any 
kind of securities, including commercial paper, could be used 
by a bank to obtain emergency circulation for 75 per cent 
of the "market value" of such securities, and 90 per cent 
of the value of municipal bonds. This act allows banks to 
issue currency equal to both the capital and surplus instead 
of the capital only. This more than doubled the currency 
issuing power of the banks, for their aggregate surplus 
exceeds their aggregate capital. 

This emergency measure allows a bank to convert so large 
a portion of its securities and paper into currency that it 
makes banks reasonably safe, protects them against injury 



274 UNITED STATES MONEY vs. 

during panics. But does not this very fact make it likely 
that panics will be more frequent if now banks are made 
immune, because the interests in a panic can buy back 
securities from the public at half price ? So long as panics 
to a certainty will harm or endanger the banks the giant 
power of the banks will be exerted to prevent panics, except 
when panics may be necessary to force through Congress 
legislation desired by the banks. Once fix it, as proposed 
by the National Reserve Association, so that banks always 
can quickly and completely protect themselves against 
danger due to withdrawals of deposits by panic-frightened 
depositors, by enabling them instantly to convert their assets 
into practically an unlimited amount of currency supplied 
by law, with which to meet "runs" and pay off depositors on 
demand, and we may expect to find the banks thereafter 
more indifferent about panics. Will not the big banks desire 
panics occasionally so that they can raise interest rates and 
buy securities at "cut rates"? 

What the country needs is legislation not to make banks 
safe and sound during panics, but to remove altogether the 
practices in Wall Street and the conditions in the banking 
system that always tend to cause financial disturbances and 
panics. The Aldrich plan seeks only to protect the banks, 
to make banks panic-proof. It does not make the country 
proof against panics. In fact it grants to the National 
Reserve Association power to cause panic any time by con- 
tracting the currency, which in turn instantly forces con- 
traction of bank credit, or loans, ten times as much. This 
may be ruinous to borrowing business men and corpora- 
tions, force slaughter of securities and commodities, smash 
prices, close factories and cause distress and panic. 

Unless the causes of panics and the means used to create 
them can be abolished. Congress surely should leave the laws 
so that banks will have just as much to lose by panics as 
individuals. Leave the baiiks in the same boat with the 
people and corporations. Banks can somewhat restrain 
Wall Street, the people cannot. This is the very best 
insurance against panics possible to obtain, until the country 
is ready resolutely to grapple with Wall Street and the 
banks to remove for all time the well-known panic-inciting 
evils. 

It was reported that in an address before the Merchants* 
and Manufacturers' Association at Milwaukee on January 



CORPORATE CURRENCY 275 

30, 1912, Robert W. Boynge, a member of the National 
Monetary Commission, said: 

"The United States has 40 per cent of the banking wealth 
of the world, and yet it is the only country that has a 
banking system that collapses at the first gign of a panic. 

We have a system of banks, which as soon as they see a 
speck upon the horizon, draw within themselves, and we 
have a situation similar to that of 1907. In 1907 we had 
more than $1,000,000,000 of gold actually on hand, but we 
were forced to go to the Bank of England to beg it to come 
to our rescue. We had the resources, but we had na 
affiliations of our banks to co-operate to meet the situation. 

Our present system of bond security currency is most 
unscientific. The time may come when the national debt is 
paid off, and then there will be no issue of currency, regard- 
less of the business conditions of the country* Then again, 
we might become involved in a big international war, when 
we would have a big issue whether we need it or not. The 
time has come when we must change our entire monetary, 
system." 

This severe indictment of the national banking system is 
true. But he should have said that the bankers alone are to 
blame, because they framed and have jealously kept the 
system in force for 48 years. When the banks have so sig- 
nally failed, shall we now allow Congress to turn the whole 
thing over to the discretion of the banks, public currency 
and all ? The system must be changed. But the new should 
be a public institution, not a private bank trust. We should 
not "jump out of the frying pan into the fire." 

The national banking system in its provisions was dictated 
by bankers for the benefit of bankers. Since 1864 the banks 
have caused the defeat of every bill designed to strengthen 
and improve the system. It has blocked in Congress changes 
recommended in the interest of depositors and the public 
made by every United States Comptroller of the Currency 
during 40 years. Every material amendment of the law has 
been at the demand of the banks for their own benefit. They 
have fought steadily to maintain that system and increase 
its profits and power by acts of Congress. But now with 
one voice the bankers condemn their system as inelastic, 
inefficient, panic-inspiring and dangerous. Why? Just 
because the Aldrich scheme will greatly increase the power 
and profit of the banks, and therefore they are trying to 



CORPORATE CURRENCY 277 

frighten the people into forcing Congress to adopt this new 
experiment. 

Depositing Government funds in banks has largely been 
a matter at the discretion of Secretaries of the Treasury. 
If the trail was followed and all facts laid bare it would be 
a welcome thing if during some administrations a condition 
was not uncovered reeking with favoritism, bank intrigue, 
political bargaining, official delinquency if not graft and 
crime. During the past forty years hundreds of millions of 
dollars have been handed over to the banks for their use 
absolutely free, and even now (since 1908) only a nominal 
I per cent per annum is paid for the use of Government 
deposits that enable the banks to increase their credit loans 
4 to 10 times such deposits. It would be worth the cost of 
an investigation if it could be shown that such deposits have 
not been used for political purposes and their disposal had 
no connection with the well known fact that so many treas- 
ury officials and their subordinates leave the public service 
to accept highly profitable bank positions. It would be a 
splendid tribute to official honesty if the record proved clear, 
for evidence is abundant that there is no length to which 
some big banks would not go to increase profits. The whole 
system of dealing between the banks arwl the Government 
during 48 years has been of a character that no sane busi- 
ness man would employ in his private business. In 1864 
national banks were an "infant industry." The Government 
was generous to its offspring from the start. But as the 
infant has grown in size it refuses even at forty-eight years 
of age to be weaned, and it has attained such strength on 
the profits it has nursed from the Government that it is a 
question whether the parent now has power to wean this 
profit-hungry corporate monster. 

The biggest congressional bank graft has yet to be de- 
scribed. By the act of June 3, 1864, national banks were 
charged a duty or tax of i per cent per annum on such 
bank-note currency as they issued. This was nominal 
because they got the 6 per cent interest on the deposited 
bonds and also 6 per cent to 10 per cent for the currency 
loaned to the people. That law also required national banks 
to pay each year J4 per cent on their total average def)osits 
and on the portion of their capital in excess of their hold- 
ings of Government bonds. This was a franchise tax paid 
for the monopoly and the rich privileges granted by law 
under which banks receive the deposits of the people, adver- 



278 UNITED STATES MONEY vs. 

tise their institutions as United States depositories, and 
make loans of credit at 6 per cent or other going rate 
aggregating 4 to 10 times their cash assets, or reserves. 

From 1864 to 1882 the national banks paid Government 
taxes: on circulation $52,253,518, on deposits $60,940,067, 
on capital $7,855,887, total $121,049,473. For 1881 the tax 
on deposits was $4,940,945 and on capital $431,233. For 
1882 and to June i, 1883, on deposits $8,295,717, on capital 
$707,751. This was besides the internal revenue stamp tax 
on bank thecks and drafts put on as a war measure, and 
which the banks forced their customers to pay. 

By act of March 3, 1883, the war stamp tax was abolished. 
But that was not all. The banks got a provision in the same 
act abolishing their ordinary tax on deposits and on capital. 
This absolutely exempted national banks and bank assets 
from all federal taxation. They only had to pay the special 
I per cent on such currency as they might issue. 

The loss to the Government and g^in to the banks by this 
one little legislative act was enormous, and the Government 
and the people did not get one penny of benefit. 

If that law had not been repealed the Government would 
have received from the banks in 191 1, $33,424,000 as J^ per 
cent tax on $6,684,800,000 deposits and $5,040,000 on 
$1,008,180,225 capital, total tax for 191 1, $38,464,901. 

During the 29 years, 1883 to iQii* deposits averaged each 
year $3,024,000,000, a taxable total of $87,690400,000, and 
capital averaged $680,000,000, a taxable total of $19,719,- 
000,000. Thus a grand total of $107,409,400,000 escaped 
the J^ per cent tax, a direct saving to the banks and a direct 
loss to the Government of $537,047,000, more than a half 
billion dollars, or enough to pay off and cancel about 60 per 
cent of the entire bonded debt of the United States. That 
prodigious sum was voted by Congress out of the pockets 
of the people and into the pockets of the associated national 
banks without the slightest justice, reason, necessity or 
benefit to the people or the Government, a direct gift by law 
to the banks obtained either by skillful lobbying or political 
and legislative corruption and crime. 

And so long as Congress continues to allow the banks to 
shape the banking and currency legislation of the United 
States so that the 7,331 national banks can go on collecting 
interest on ten billions of dollars with but one billion of 
cash capital invested, paying the Government not one dollar 
for the privilege and protection granted, just so long the . 



CORPORATE CURRENCY 279 

T)anks will save and the Government and people will lose the 
38 million or more dollars of taxes the banks would be 
paying annually if they had not put through Congress that 
sinister legislation. Why should national banks be exempt 
while other corporations and individuals must pay heavy 
taxes ? There is no higher duty upon Congress than to end 
this half-century of bank graft and crime. It must be 
expected that the banks will threaten panic and ruin, and 
they may even inflict it on the country. If any panic comes 
the banks will cause it. If they do it, the people will break 
every bank and fill every prison with lawless bankers. The 
people will fight fire with fire. The tyranny of the banks 
must be broken right now or the people forever will be mere 
abject slaves of a merciless, cruel and criminal incorporated 
bank combine. There can be no compromise. The cam- 
paign of 1912 will for all time determine whether the people, 
or Wall Street and the banks, are to rule this republic. 

Is there anything in this history of the national banking 
system that will justify Congress in now taking away from 
Government and granting for 50 years to a corporation 
owned by the banks a monopoly of the issuing and control 
of the volume of the entire public currency, absolute control 
of the life-blood of all business ? 

We wonder how long the people are going to remain 
asleep to the fact that for fifty years in one way or another 
the confederated banks and Wall Street, as a great and 
greedy incubus on the Government, have been constanth 
grafting and plundering the nation and the people under 
acts of Congress of their own creation, every year in greater 
degree and all the time treating with utter contempt the 
Government and its laws by violating every restriction and 
every civil and criminal statute made to regulate banks in 
the interest of the public. How long are the people going to 
tolerate such things? No wonder these special privilege 
interests have such contempt for the people! 

We hear a great deal about "too much politics in busi- 
ness." These striking facts from the official records and 
statutes seem clearly to show that since 1864 there always 
has been too much "business" in politics. Any impartial 
student must see that the national banking system has been 
the great organized source of political corruption and legis- 
lative wrong-doing ; that by clever and subtle means it has 
continuously robbed the public treasury and the people of 
untold millions under forms of law procured through their 



28o UNITED STATES MONEY vs. 

improper influence and activity; that uniformly during 
nearly half a century it has sought and usually obtained 
legislation vastly increasing the powers and profits of the 
banks and has successfully blocked all legislation pressed 
for the benefit of the public imposing restriction or regula- 
tion upon the banks to increase their soundness and 
efficiency. 



CHAPTER XVL 
BANK GRAFT AND CRIME. 

Brakert Accused WholetiJe by Uaitod States Comptroner of Uie 

Cimencj* 

If Christ should reappear in 1912, no doubt His first work 
would be to again scourge the dishonest *'money changers" 
and drive them from the banks. 

There are honest, upright, conscientious bankers, very 
many of them. But not so many as we had supposed until 
the United States Comptroller of the Currency, a fearless, 
courageous and honest public officer, with the reports of 
the banks and his bank examiners before him wrote, and 
on December 4, 191 1, filed, his recent official annual report 
to Congress. 

In that report, covering the current year to October 31, 
191 1, he officially makes the most shocking indictment and 
grave charges against an actual majority of all the national 
banks and bankers of the United States. 

In 1910 author came into possession of definite informa- 
tion showing that a large per cent of all national banks 
repeatedly and intentionally violate the spirit and plain letter 
of the law. The estimate then made was 40 per cent. 
This seemed so astounding, and struck the few persons 
•spoken to about the matter as being so incredible and im- 
possible, author hesitated to jeopardize his own reputation 
for veracity by publicity of the facts he knew to be true. 
It was only when these very lawless banks publicly sought 
to greatly augment their profits and power by urging Con- 
gress to adopt the Aldrich central bank plan that author 
ventured to disclose his information about the astonishing 
prevalence of lawlessness among national banks. 

Writer alluded to the subject in his written analysis of 
the "Aldrich plan" made on November 10, i^ii, and per- 
sonally handed to President Taft at the White House on 
November 16, ipii, which statement in full appears in the 
*' of this volume, together with other surprisiog 

281 



282 UNITED STATES MONEY vs. 

information as to the attitude of the present administration 
on this grave question. 

Subsequently, on December 4, 191 1, official confirmation 
of these alarming conditions was made by the U. S. Comp- 
troller of the Currency in his report to Congress filed on 
that date. 

"Milwaukee, Wis., Dec. 8, 191 1. 
Hon. Lawrence O. Murray, 

U. S. Comptroller of the Currency, 
Washington, D. C. 

Dear Sir : A published Washington dispatch quotes from 
your annual report to Congress as follows : 

The dishonest practice by officers of national banks of 
receiving personal compensation for loans made by the bank 
is a growmg evil and has already reached such proportions 
as to call for criminal legislation on the subject. In this 
manner either the bank is defrauded of lawful interest, 
which it would otherwise receive, or usurious interest is 
exacted of a borrower by the corrupt officer. A secret re- 
ward to the officers is sometimes a deliberate bribe for 
:)btaining a loan on insufficient security.' 

Is this a correct quotation? If so, I most heartily con- 
gratulate you for your courage in thus rendering a great 
and timely public service. 

A few years ago two personal acquaintances, prominent 
and active field representatives of two of the larger bond 
houses, amazed me by stating that in their work, that for 
years has chiefly been selling securities to national, state 
and savings banks and frust companies, it was the exception 
when they found a bi nk official who would not demand or 
receive a secret commission for himself on securities that 
he purchased for his own institution. As legally this was a 
felony, larceny or embezzlement, it seemed unbelievable. 
But they insisted that this was true of their own personal 
knowledge, and my relation to them is such that I know 
they would not deceive me. And now your astonishing 
official charges against the honesty and character of many 
bank officials is additional confirmation. 

You of course realize that any such commission is added 
to the price of securities and really is paid by the bank and 
not by the bond house. In institutions having a capital 
stock the stockholders are robbed by their own paid and 
trusted official. In mutual savings banks tihe loss would fall 
upon savings depositors. 



CORPORATE CURRENCY 283 

These two sources of graft may help to explain the 
mystery as to how some bank officials with no personal 
capital and only a living salary in a few years have accumu- 
lated great fortunes. And it also illuminates the motives 
actuating the fierce scramble for control of every financial 
institution or insurance company holding for investment 
any considerable accumulation of the deposits or savings of 
the people. 

Your disclosures are especially timely and important in 
view of the pending proposal that Congress actually turn 
over to a private syndicate of bankers a billion dollars of 
public currency and the entire revenues of the Federal Gov- 
ernment to be forever held and invested for the exclusive 
profit of such private syndicate. 

I have it on seemingly good authority that the sworn 
reports of the banks on file in your office show that a large 
per cent of all national banks have violated the law. If not 
inconsistent with your duties, I would be glad to learn 
whether in whole or in part this report is true. 

Thanking and again earnestly congratulating you, I am, 

Very respectfully yours, 

AuftED O. Crozier." 

"W L E TREASURY DEPARTMENT. 

Washington. 
Office of 
Comptroller of the Currency. 

Address reply to 
'Comptroller of the Currency.' 

December 12, 191 1« 
Mr. Alfred O. Crozier, 
Plankinton House, 

Milwaukee, Wis. 
Sir: In reply to your letter of the nth inst., you are 
advised that a table showing the percentage of banks violat- 
ing the law in regard to real estate loans, reserve, excessive 
loans and borrowed money, appears on page 22 of the 
Comptroller's report for this year, a copy of which is being 
mailed to you, under separate cover, as requested. A copy 
is also bemg sent to F. W. Crozier, care The Romaine, 
Middleton Avenue, Cincinnati, Ohio. 

Respectfully, 

T. P. Kane, 
Deputy Comptroller.*' 



^ UNITED STATES MONEY vs. 

Page 87 of said report shows that the above quotation 
was accurate. On the same page the Comptroller also says: 

"An amendment forbidding any officer of a national bank 
to directly or indirectly receive or accept money or other 
valuable thing from any borrower from the bank as a re- 
ward, inducement, or consideration for obtaining the loan 
from the bank of which he is such officer should also be 
enacted. 

It is recommended that the taking or accepting of money, 
or other valuable thing from a borrower by any officer of a 
national bank for his own personal use as a reward, induce- 
ment, or consideration for obtaining the loan from the bank 
of which he is such officer shall be made an offence and 
punished by imprisonment in the penitentiary. 

A law should be enacted determining the period during 
which any person can be, prosecuted, tried, or punished for 
offences under the National Bank Act. 

Many criminal offenders against the national banking" laws 
have escaped just punishment by reason of the statute of 
limitations." 

Such crimes are secretly done and usually easily concealed 
for a long time. Yet after three years no prosecution can be 
started. This is an inducement to commit crime, for the 
guilty always think they can conceal the crime at least three 
years. The Comptroller recommends the period be ten years 
within which action by the Government may be started in 
such cases. 

The following exact quotation from page 22 of said 
report, including, the table given in full, not only confirms 
author's information and statement to the President made 
three weeks before such report was filed, but it shows that 
instead of only 40 per cent being lawbreakers, the sworn 
official reports filed by the bankers themselves contain the 
amazing confession that more than half of all the national 
banks of the United States persistently, continuously, know- 
ingly and wilfully violate several different plain provisions 
of the law. Th report says : 
^'Violations of the Provisions of the NationaUBank Act. 

A record is made, subsequent to the abstracting of the 
reports of condition of the national banks for each call, of 
the number of banks violating the restrictions and limita- 
tions of the national bank act for the purpose of ascertaining 
the percentage of offending banks. Deficiency in reserve 
represents the greatest number of violations and during^ the 



CORPORATE CURRENCY 285 

past report year has varied from 21.38 per cent on June 7, 
191 1, to 25.54 per cent on September i. The percentage of 
banks making excessive loans and granting accommodations 
on the security of mortgages or other lien on realty is very 
nearly the same, varying in the former case from a minimum 
of 14.10 per cent on June 7 to a maximum of 19.21 per cent 
on November 10, 1910, whereas the violations in relation to 
loans on realty vary from a minimum of 14.73 P^^ ^^^^ ^^ 
November 10, 1910, to a maximum of 16.10 per cent on 
June 7 last. The number of banks violating the provision 
of law relating to liabilities for borrowed money, etc., in 
excess of their capital stock is relatively very small, ranging 
during the past year from a minimum of 0.51 per cent on 
January 7 to a maximum of 2.91 per cent on September i. 

The percentage of violations of the provisions of law in 
question at date of each call, from January 31, 1910, to 
September i, 191 1, is shown in the following table: 

Sec. 5137 Sec. 5191 Sec. 6200 Sec. 5202 

real estate reserve excessive borrowed 

loans loans money Total. 

Date^- Percent. Percent. Percent. Percent. Percent. 

Jan. 31, 1910 15.03 19.91 16.03 0.24 51.20 

March 29, 1910. . . 10.52 25.87 16.04 '32 52.75 

June 30, 1910 11.40 17.68 14.56 .95 44.59 

Sept. I, 1910 12.42 22.46 16.40 1.78 53.06 

Nov. 10, 1910 14.73 22.97 19.20 .58 57.49 

Jan. 7, 191 1 16.04 23.72 17.47 .51 57.74 

March 7, I9II**.. 15.37 23.69 16.56 .79 56.41 

June 7, 1911 16.10 21.38 14.10 1.49 53.07 

Sept. I, 191 1 15.86 25.54 15.56 2.91 59-8/' 

The most recent report of the banks, September i, 191 1, 
shows that 59.87 per cent, or about 4,400 of the 7,331 
national banks of the United States, were deliberate law- 
breakers, only 2,931 complying with the statutes of the 
United States. As time goes on it seems to be getting 
worse, for on September i, 191 1, nearly 700 more banks 
were violating the law than on January 31, 1910. If the 
same per cent of all the people were law-breakers there 
would be 54,000,600 criminals in the United States. 

Breaking law is crime. Why did half the banks know- 
ingly commit crime? For profit, nothing but profit! It 
was always by making loans illegally or on unlawful security 
for the sake of the interest profits they received. 

That is the motive, the only motive, actuating the thief ^ 



286 UNITED STATES MONEY vs. 

embezzier, burglar and highwayman. But such criminals 
have at least an excuse that lawless bankers do not have, 
they are homeless, friendless, penniless and hungry. 

Isn't there a bit of terrible humor in the national associa- 
tion of bankers employing that distinguished detective to 
discover and punish those stealing from the banks, when 
crime against the interests of depositors and the community 
is constantly being committed wholesale by banks, yes by a 
majority of all national banks? 

The Federal Government now is devoting its giant 
strength to discover, expose and punish labor union men 
alleged to be guilty of unlawfully transporting dynamite in 
interstate commerce and using it to destroy property in- 
volved in controversies between capital and labor. This 
action is right, and necessary. Law breaking of every kind 
must stop or soon there will be no government. 

No honest man can or will justify, excuse or condone 
criminal violence and destruction of property to advance the 
cause of labor or any other cause. And the moral sense of 
everybody is shocked when such crimes even unintentionally 
cause loss of human life. 

But the relatively few labor men accused (less than I to 
each 100,000) at least claim that they did not break law for 
personal profit but to advance the cause of labor and im- 
prove the condition in life of their brother workingmen. 
But the banks by affidavits attached to their official reports 
to the Government coolly confess that all the time half of 
them are breaking the law for no other reason than to get 
extra personal profit that they do not need. 

We have shown in a former chapter that the compara- 
tively few national banks, because law has prohibited indi- 
viduals doing what banks are granted authority to do, in 
42 years actually have cleaned up net profits aggregating 
about as much as the total of all the money of 3ie "United 
States in the hands of the people, the banks and the Gov- 
ernment. The relatively larger portion of these wonderful 
profits have been made since about 1900. 

If the American Bankers* Association was thus "caught 
with the goods on it" the comparison with the International 
Iron Workers' Union might just now be more exact. But 
while the Federal Government seems to have conclusive 
evidence of the guilt of a majority of all of the local national 
banks federated in such national banking association, there 
has been no charge and no suspicion of guilt against the 



CORPORATE CURRENCY 287 

hundreds of local unions and their thousands of members 
federated in the national iron workers' organization, the 
officers of which, or some of them, seem to have been law- 
less and unfaithful to the highest interests of labor. Out of 
several million union men only a few dozen are even 
accused ; but over half of all national bankers confess their 
guilt on oath. 

How can the Federal Government justly and safely pursue 
and punish lawless workingmen unless it as relentlessly 
prosecutes and brings to justice the guilty bankers of the 
United States against whom already it has ample and icon- 
clusive evidence in the shape of sworn confessions now on 
file in the office of the United States Comptroller of the 
Currency. 

Why has not prosecution against even one of the thou- 
sands of rich and powerful bankers conclusively shown by 
the Government records to be law-breakers been started by 
the Department of Justice? 

If the laws and penalties have been made inadequate at the 
instigation of the offending but politically influential men 
and banks now shown by the United States Comptroller to 
have been all along violating law, why did not the President 
indorse, in his financial message to Congress on December 
21, 191 1, the earnest and urgent recommendation of the 
Comptroller in his December 4, 191 1, report that the laws 
be amended to reach the high grafting bank criminals, 
instead of endorsing the Aldrich plan for a private central 
bank multiplying a hundred times the profits and power of 
these very lawless bankers? 

The law requires banks always to have a cash reserve 
equal at least to a certain specified per cent of its total loans 
of bank "credit," varying from 15 to 25 per cent according 
to locality. Lc^ns of credit average at least ten times the 
cash in reserves. This is because three-fifths of the reserve 
of a "country bank'* can be deposited in a central reserve 
city bank where it becomes the basis for another volume of 
credit loans. To say that the cash reserve of a bank is below 
the legal requirement is merely another way of saying that 
the bank has illegally and dangerously inflated its loans of 
credit out of all lawful proportion to its cash reserve. The 
larger the volume of such loans of credit the greater the 
{H-ofit that the bank gets with the same investment So 
usually it is done deliberately, and solely for extra profit. 
There might be some moral excuse during a panic for 



^88 UNITED STATES MONEY vs. 

reserves being below the legal limit, but there has been no 
panic now for over four years. 

On page 22 of said report it is shown that in the 42 years 
since the present system started the national banks have 
actually earned net $3,107,185,441, and have paid $2,336,- 
855,679 as dividends. The average dividends of all the 
banks, good and bad, during 42 years was 9.07 per cent, 
and for the year to June 30, 191 1, it was 11.38 per cent, and 
net earnings 15.57 per cent, on their capital stock. Of 
course many individual banks earn 20, 30 and some even 50 
to 100 per cent. So their violation of law to gain more 
profits was unnecessary as a reasonable business matter and 
seem to put the majority of the bankers of the country and 
many of the great leaders of finance in the unenviable posi- 
tion of mere reckless, gambling financial adventurers, will- 
ing to ignore and break the laws of the land and endanger 
the safety of the deposits of the people for the chance of 
getting just a little bigger profits for themselves. 

Does the business of banking tend to make good men 
narrow, selfish, sordid and criminal, or do men of that nat- 
ural stripe seek control of banks to gratify their inordinate 
lust for profit and power ? 

Truly the banking system needs "reform," but not the 
kind the bankers now are seeking and always seek. Does 
it not morally need fumigating? Whatever delinquency 
there is in the present system and law the financiers are 
responsible for it. Usually they have framed most mone- 
tary and banking legislation and induced Congress to adopt 
it. Some provisions of the law are as harmless to male- 
factors as the "ten commandments," because intentionally 
or unintentionally the law was framed to provide no way 
of enforcing it — ^no criminal penalty for its violation. 

The showing of bank violations made by the present 
Comptroller in his report must have existed at least to a 
greater or less extent during the terms of former U. S. 
Comptrollers. Why was not the law enforced against the 
offending banks? Why were not those dangerous con- 
ditions tnat so gravely affect the interests of depositors and 
the soundness of banks and the strength and stability of the 
country's financial and banking system exposed and correc- 
tion of the evils and abuses demanded by former U, S. 
Comptrollers? We do not know that there was any con- 
nection between this seeming neglect by some of the highest 
public duty, which conferred such rich and valued immuni- 



CORPORATE CURRENCY 289 



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ties upon lawless banks and bankers, and the well-known 
fact that many Treasury officials almost immediately after 
leaving the public service have obtained high and perma- 
nent official positions with banks at salaries said to be many 
times what they received from the Federal Government. 

On page 31 of his report the present Comptroller says: 
"Sixty per cent of the failures of national banks have been 
caused by violatkins of the national banking laws." The 
management often is reckless and rotten as well as criminal. 
Concealed losses because of improper loans to favorites and 



590 UNITED STATES MONEY vs. 

otherwise are "charged off*' amounting to hundreds of 
millions of dollars. Inordinate profits alone have prevented 
general ruin of banks. Just consider what it means, the 
fact that most of the deposit savings of*- all the people of 
the United States are in the custody of these criminal 
''guardians" ! 

If the Aldrich central bank plan is adopted by Congress, 
an absolute majority of the shares and control of the Na- 
tional Reserve Association will be owned and forever held 
by banks officially shown by the Federal Government and 
admitted under oath to be guilty of repeatedly, knowingly 
and wilfully violating their charters and the laws of the 
land just for the profits there was in it. 

Is Congress ready to turn over for fifty years the entire 
public currency and all the revenues of the Government and 
the other imperial powers demanded to a private corpora- 
tion so owned and controlled ? 

The people soon will know. 



CHAPTER XVII. 
CRIME OP CONSPIRACY. 

40»000 Bank Officers and Director Each Liable to $10,000 Fine 

and Two Years' 



The reason the Ten Commandments announced by Moses, 
or some of them, are constantly violated by so many people 
is because the penalty prescribed will be inflicted in the next 
world — ^perhaps — instiead of in this. The chances of pun- 
ishment are too slim and remote. 

That is the precise reason why so many distinguished 
bankers break the laws of the land over and over day after 
day, week after week, month after month, year after year. 

For instance, in his official report of December 4, 191 1, 
the U. S. Comptroller on page 22 (quoted in the preceding 
chapter), charges that on September i, 191 1, 59.87 per cent 
of all national banks were violating four separate pro- 
visions of the national bank law, viz.. Sees. 5137, 5 191, 5200 
and 5202, prohibiting loans on real estate, inadequate cash 
reserves, excessive loans to borrowers and excessive indebt- 
edness by banks, respectively. No penalty whatever against 
bank officers and directors committing such offenses against 
the law is prescribed in the "National Bank Act." These 
restrictions were imposed by law for the protection of de- 
positors and the good of the community, to make banks 
more sound. Every time these provisions of law are broken 
it is a menace to the safety of depositors and the public wel- 
fare and every offense is committed knowingly by officers 
and directors for profit. 

There are severe penalties, fine and imprisonment for 
offenses like embezzlement by subordinates against the in- 
terest of banks, but no penalties are imposed upon officers 
and directors who ignore and violate practically every pro- 
vision of law enacted to protect depositors and the public. 
As the system was devised and framed by the financiers 
this condition of course was not accidental. For almost 
fifty years bank influence and intrigue has prevented Con- 
gress enacting amendments in the public interest recom- 

291 



292 UNITED STATES MONEY vs. 

mended by Comptrollers of the Currency who had full 
sworn information showing criminal conduct and contempt 
for law by a large per cent of banks and bankers. On the 
other hand, the National Bank Act again and again has been 
amended at the instance of banks to increase their immuni- 
ties, profits and power. Deputy Comptroller of the Cur- 
rency Kane has been retained in office for years by different 
administrations because of his high ability and integrity, 
expert knowledge and skill. In a public interview reported 
in the Washington Post of March 21, 1908 (cited by Sena- 
tor La FoUette in his speech of March 24, 1908, in the U. S. 
Senate), Mr. Kane said: 

"While numerous have been the recommendations of the 
eleven Comptrollers who have presided over the affairs of 
the Currency Bureau since its establishment, which, in the 
judgment of each, would have increased the security of the 
depositors and creditors of the banks, practically none has 
been enacted into law or has received the serious consid- 
eration of the legislative branch of the Government. No 
one has had better opportunities to observe from an impar- 
tial and disinterested standpoint the practical operation of 
the banking laws and to note their weak features in regard 
to the security of creditors than the respective Comptrollers 
of Currency.. Notwithstanding this indisputable fact and 
the many recommendations made by the several Comp- 
trollers, there has been practically no amendment of the 
law since the passage of the original bank act of February 
25, 1863, which can be said to have had for its object the 
particular welfare of the depositor. 

Of the fifty-four acts amendatory of the original enact- 
ment which have been adopted since that date, practically 
all have been in the interest of greater latitude or privileges 
to the banks. 

The remedies suggested for the many unsatisfactory con- 
ditions for which the national banking laws are primarily 
responsible may be found in the recommendations made 
from time to time by the Comptrollers of the Currency in 
the forty-five annual reports submitted to Congress since 
the establishment of the Currency Bureau, and until sup- 
plied bjr legislative enactment the responsibility should rest 
where it properly belongs — upon the law and the lawmakers, 
and not upon the administrative officials." 

This is a terrible indictment of the political and legisla- 
tive activity of the Bank-Wall Street political combine made 



CORPORATE CURRENCY 393 

by the one man in the United States who best knows the 
facts and has daily access to the confidential records of the 
Comptroller's office that startlingly show the duplicity, 
graft and crime of the bankers. 

During much of this long period of nearly fifty years one 
individual, posing as a public servant, has been the pliant 
tool of the interests. That man, as chairman of the Seiaate 
Finance Committee, has come into official possession of 
practically every bill to strengthen and improve the banking 
system. He seems to have suppressed them all. Now that 
man, former Senator Aldrich, is posing as the great apostle 
of "reform" to improve the banking and currency systems. 

"A leopard cannot change its spots, or an Ethiopian his 
skin," and Aldrich cannot and has not changed. He is still 
betraying the people and the public welfare into the hands 
of banks and Wall Street. 

The pending central bank bill he wants passed as a "monu- 
ment" to his name and public record. It would be appro- 
priate ; for it is by far the most crafty, selfish, subtle, unpa- 
triotic, evil, daring and dangerous measure introduced* into 
Congress since the republic was created. It is a fitting end 
and climax of such a treasonable career. 

The only remedy the National Bank Act provides is the 
possible forfeiture of charter by the bank for violation of 
the provisions of the law. 

Sec. 5239 reads: "If the directors of any national bank- 
ing association shall knowingly violate, or knowingly permit 
any of the officers, agents, or servants of the association to 
violate any of the provisions of this title, all the rights, 
privileges and franchises of the association shall be thereby 
forfeited. Such violation shall, however, be determined and 
adjudged by a proper circuit, district, or territorial court 
of the United States, in a suit brought for that purpose by 
the Comptroller of the Currency, in his own name, before 
the association shall be declared dissolved. And in cases of 
such violation every director who participated in or assented 
to the same shall be held liable in his personal and individual 
capacity for all damages which the association, its share- 
holders, or any other person shall have sustained in conse- 
quence of such violation." 

The Comptroller's report clearly shows that on September 
I, 191 1, just 4,389 of the 7,331 national banks under said 
Sec. S23P legally had forfeited their charters, only 2,942 
banks bemg then within the law. But the clever genius who 



994 UNITED STATES MONEY vs. 

drafted that section carefully provided that no bank should 
be declared dissolved until the Comptroller personally in his 
own name had instituted suit in court and prosecuted same 
to judgment. If the Comptroller refuses or neglects to act 
all the banks are safe and immune under that act even if 
all such banks (as they do) daily violate every such pro- 
vision of law. There is no power in the law or under the 
Government to punish or bring to justice or to forfeit the 
charter of a bank if the Comptroller will not proceed. He 
is the autocrat over all banks and above the law. The very 
life of over half of the banks is in his hands and each justly 
merits the death penalty. Yet year after year passes, Comp- 
troller after Comptroller comes and goes, the banks, a ma- 
jority of them, laugh at the penaltyless laws and go on vio- 
lating for gain the statutes of the United States, and noth- 
ing is done to remedy the rotten condition or to bring the 
offenders to justice. Why? 

Is the explanation partly in the fact that many comp- 
trollers go from their faithless public service and imme- 
diately become president or an officer of some bank at a 
salary many times greater than that paid them by the Gov- 
ernment? What paralyzed their official conduct? Were 
some of them bribed in office by the promise or hope of sub- 
sequent high position in private life, or were they bribed 
with office before they were appointed on the understanding 
that they would enforce the law against employees of banks, 
but not against bankers? Does it go still higher? Is it 
possible that sometimes the lawless banks in advance have 
bargained for immunity, in exchange for nation-wide bank 
political support, with a candidate or prospective candidate 
for President or with his political managers, the banks to 
name the Comptroller and perhaps the Secretary of the 
Treasury? It is a serious thing even to think about, but 
there is some reason why banks and bankers are always 
exempt while all other people must obey the law or be 
pursued by the entire power of the Government and brought 
to justice. 

This is not intended to reflect on the present Comptroller. 
Writer has means of knowing that he is honest and fearless 
and has been making an almost desperate effort to induce or 
force the banks to keep within the law. And this apparently 
without the proper support of the present administration. 
And his brave and courageous public denunciation of bsmk 
graft and crime and criminals in his official report, and his 



CORPORATE CURRENCY 395 

showing from the record the extent of violations, is almost 
Providential, coming at this time when the banks brazenly 
are trying to induce Congress to turn over to them some of 
the greatest functions of Government ; practically giving to 
the lawless banks power to "regulate" themselves for the 
next fifty years. 

It is a hard place to put a Comptroller, for better than 
anyone else he knows the imperial political and legislative 
power of the banks and their ability to punish any Comp- 
troller who may refuse to do the will of the banks instead 
of his sworn public duty. 

Sec, 5147 reads: "Each director, when appointed or 
elected, shall take an oath that he will, so far as the duty 
devolves on him, diligently and honestly administer the 
affairs of such association, and will not knowingly violate 
any of the provisions of this title, and that he is the owner 
in good faith, and in his own right, of the number of shares 
of stock required by this title, subscribed by him, or stand- 
ing in his name on the books of the association, and that 
the same is not hypothecated, or in any way pledged, as 
security for any loan or debt. Such oath, subscribed by 
the director making it, and certified by the officer before 
whom it is taken, shall be immediately transmitted to the 
Comptroller of the Currency, and shall be filed and pre- 
served in his office." 

This clever bank act was put through Congress when the 
attention of the public and Congress was absorbed by the 
daily events of the civil war. It was moral if not legal 
treason to take advantage of the Government at such a 
time. 

The "joker" in the above quoted oath is this : A prose- 
cution for perjury can be maintained only for false swear- 
ing as to a past or present fact, not future official conduct. 
If the director did not own the shares he swore he did he 
could be sent to jail for perjury. But if he continuously 
violates his oath of office, commits treason to his sacred 
trust, as a majority of bank officers and directors do, the 
penalty for perjury cannot be inflicted. The President of 
the United States might be impeached, but could not be 
punished for perjury if he violated his oath of office. But 
there is no one in the bank to move impeachment of an 
offending director, for all are particeps criminis, cooperate 
in the violations, are guilty of the same offenses. And im- 
peachment of bank officers is not authorized by law. Exces- 



2g6 UNITED STATES MONEY vs. 

sive loans, illegal real estate loans, inadequate cash reserves 
and excessive indebtedness by the bank usually are impos- 
sible except with the knowledge and consent of practically 
all of the officers and often the directors of the bank. Par- 
ticularly so when it goes on continuously year after year. 
The fact is, such matters are deliberately done or winked 
at because most directors have become such solely to obtain 
favors from the bank for enterprises or corporations in 
which they are financially interested. That almost universal 
condition is the curse and greatest evil and danger of the 
present banking system. In a broad sense they are con- 
spirators, not bankers. 

With no penalties against bankers in the National Bank 
Act and friendly Comptrollers to protect the banks against 
forfeiture of their charters, and with a statute of limitations 
outlawing offenses after three years, the national banking 
system, steeped in lawlessness, graft and crime, has gone 
on for nearly a half century scott free and immune. The 
law defying beneficiaries are constantly seeking richer legis- 
lative exemptions and privileges as they grow inordinately 
rich, often by the fruits of graft and crime. In their fan- 
cied security, shielded by tfie significant omission of the 
usual penalties from the bank statute, they have overlooked 
another statute that may cause them a rude awakening and 
at last bring them to justice. 

Crime of Conspiracy. 

Section 5440 of the United States Revised Statutes in 
the New Code is as follows : 

"Section 37. If two or more persons conspire either 
TO commit any offense against the United States, or 
TO defraud the United States in any manner or for 

ANY purpose, and ONE OR MORE OF SUCH PARTIES DO NOT 
ACT TO EFFECT THE OBJECT OF THE CONSPIRACY, EACH OF 
THE PARTIES TO SUCH CONSPIRACY SHALL BE FINED NOT 
MORE THAN TEN THOUSAND DOLLARS, OR IMPRISONED NOT 
MORE THAN TWO YEARS, OR BOTH." • 

Under this section and the court decisions there is not the 
slightest doubt that every participating officer and director of 
the 4,389 offending national banks is legally guilty of the 
crime of conspiracy, and that there is in the Comptroller's 
office and elsewhere ample evidence to indict, arrest, convict 
and punish by a fine not exceeding $10,000 or imprisonment 



CORPORATE CURRENCY 297 

not more than two years, or both, more than 46,000 bank 
officers and directors. Nor will the statute of limitations aid 
them to escape justice. The courts have decided that in a 
continuing conspiracy of this character the three years 
begins to run only from the last act by any one of the 
conspirators pertaining to the subject matter of the con- 
spiracy. 

It is clearly an "offense against the United States^' to 
violate any lazv of the United States whether there is a 
prescribed penalty for such violation or not. And "two or 
more persons conspire to commit an offense against the 
United States^' every time bank officers or directors violate 
the National Bank Act. The Supreme Court decisions make 
this fact clear, 

"Ignorance of the law excuses no man." Even if the 
offending bankers have overlooked this drastic statute 
imposing severe penalties for the crime of conspiracy, they 
are entitled to no sympathy or mercy. They admit under 
oath that they have repeatedly treated the authority of the 
Government with contempt and they violated the laws of 
the land because they thought there was no effective punish- 
ment provided. 

Atwell on Federal Criminal Law," on page 219, says: 
A conspiracy as commonly understood is a corrupt agree- 
ing together of two or more persons to do, by concerted 
action, something unlawful, either as a means or an end. 
The word "corrupt," as used, means unlawful. The intend- 
ment of this definition is that to conspire to do an unlawful 
act ; or to conspire to accomplish a result which may in itself 
be lawful, but to do it in an unlawful manner ; or an unlaw- 
ful agreement to accomplish an unlawful result, are con- 
spiracies. The unlawful combination may be expressly 
proven, or it may be provable from concerted action in 
itself unlawful. If one join the conspiracy at any time after 
the formation of the conspiracy, he becomes a conspirator, 
and the acts of the others become his, by adoption. 

That there is, or may be, a difference between the punish- 
ment prescribed in this section, and that prescribed in the 
statute that the conspiracy was formed to violate, is imma- 
terial. Congress has the power, says the Supreme Court of 
the United States, in Clune vs. United States, 159 U. S. 590, 
to enact a statute making a conspiracy to do an act punish- 
able more severely than the doing of the act itself. The 



it 
it 



298 UNITED STATES MONEY vs. 

power exists to separate the offenses, and to affix distinct 
and independent penalties to each. 

As above indicated, there need be no proof of the express 
agreement. The full measure of the law is met if the facts 
and circumstances indicate with the requisite lawful cer- 
tainty the existence of a preconcerted plan. 

Reilly vs. United States, io6 Federal, 896; U. S. vs. 
Cassidy, 67 Federal, 698 ; U. S. vs. Barrett, 65 Federal, 62 ; 
U. S. vs. Wilson, 60 Federal, 890; U. S. vs. Newton, 52 
Federal, 275; U. S. vs. Sacia, 2 Federal, 754. So, under 
the same authorities, it need only be shown that one or more 
of the overt acts charged in the indictment have been com- 
mitted, and that they were done in furtherance of the con- 
spiracy. Federal Statutes Annotated, Volume 2, page 250. 

Text-books and courts unite in the proposition that where 
there is prima facie showing of conspiracy, all of the acts 
done, and all of the declarations made in pursuance of the 
originally concerted plan, and with reference to the common 
object, by any one of the conspirators, are admissible 
against all." 

The above is a verbatim quotation from the leading text-* 
book on federal criminal law and is an authority reorganized 
by the courts. And the definition of conspiracy given and 
the matters incidental thereto above described are all fully 
sustained by the Supreme Court of the United States in the 
cases cited and by many other cases. 

Every national bank must have at least five directors. 
Some have as high as 20 or more. The National City Bank 
of New York has 23, and the National Bank of Commerce 
40. The average number of directors of each of the various 
national banks, no doubt, is at least 10. This would seem 
to indicate that there are at least 43,890 directors of the 
4,389 national banks ofl[icially accused by the United States 
Comptroller in his report of December 4, 191 1, of violating 
the laws of the United States. Besides, many officers not 
directors are also involved. The total number of bankers 
and directors implicated and thus officially charged with the 
crime of conspiracy by a high federal official must exceed 
40,000. No doubt a large portion of these offending direct- 
ors have participated in these acts either ignorantly or 
thoughtlessly, trusting the bank officers and blindly doing 
what they are directed. Unfortunately for them, this does 
not relieve such persons from legal guilt and liability. If 
they have as directors aided or consented to the making of 



CORPORATE CURRENCY 299 

just one illegal loan or the doing of just one illegal act or 
omission by the bank, they are under the law guilty of the 
crime of conspiracy and liable to indictment, arrest, con- 
viction and a fine not exceeding $10,000 or not more than 
two years' imprisonment, or both. And each separate viola- 
tion may be considered a separate and distinct conspiracy 
carrying the same penalty. As some banks are committing 
such offenses almost daily, every participating officer and 
director is accumulating penalties that if exacted, as some- 
time surely they will be if the lawless practices continue, it 
may ruin him financially and even force him to spend much 
of the balance of his life in prison as a condemned criminal. 
Does it pay to be mixed up in such a dangerous mess ? 

This accurate and plain statement of the law and the 
liability can be verified by any director who will consult his 
legal adviser on the subject. It is here put forward as a 
friendly and timely warning to the thousands of honorable 
and patriotic business men who have been induced by 
bankers to accept directorships and thus give the bank the 
benefit of their influence and the profit of their accounts and 
business, and who have put implicit but mistaken faith and 
confidence in the honor and wisdom of the bankers manag- 
ing the institutions, carelessly and unquestioningly comply- 
ing with their requests and blindly acquiescing in their 
decisions. 

They have been misled and put in a position of grave 
personal danger by the bankers whom they trusted arid who 
knew the law and the fact that it was bein^ violated. There 
are no extenuating circumstances excusin|^ most offending 
bank officials, because they know the condition of the bank 
at all times and make frequent sworn reports to the Comp- 
troller of the Currency ; and from such reports that official 
shows that over half of all national banks are guilty. For 
a director who is really honest and patriotic at heart and 
desires in fact to be a law-abiding citizen instead of a con- 
fessed criminal there is but two honorable courses : 

1. Tell the bank officers who have deceived and led him 
into danger just what he thinks of their conduct and then 
resign from the board. 

2. Purge the bank of all criminal lawlessness by forcing 
the immediate resignation of every official whose past con- 
duct has shown a willingness to ignore and violate the pro- 
visions of the law and thereby subjected directors to the 
danger of successful criminal prosecution and brought the 



300 UNITED STATES MONEY vs. 

institution and the banking system into contempt and public 
disgrace. 

Every honest director owes it to the community, the Gov- 
ernment, the depositors who have trusted him, and to him- 
self and his family, to act promptly and courageously, and 
thus so far as possible cure the grave evils that have grown 
up largely because of his carelessness and lack of thought 
and attention about important matters for which he volun- 
tarily became morally and legally responsible. 

As the comptroller has made his sweeping charges 'with- 
out naming the particular offending banks, the 2,942 honestly 
conducted banks should insist on the guilty banks being 
named if not punished so that unjust suspicion may not 
cause the innocent banks to suffer because of these lawless 
acts of the guilty. That would be simple justice. A public 
congressional investigation of the national banking system 
is now justified and necessary and the best means for acquit- 
ting innocent banks and fixing the blame upon the guilty. 
Honest and upright bankers should join in llie demand for 
such a public investigation. 

As more than half of all national banks are officially 
shown to be guilty of intentional lawlessness, and their 
officers and directors guilty of criminal conspiracy under 
the statutes of the United States, it will be patriotic and the 
part of wisdom for all honest and honorable bankers and 
directors to oppose the Aldrich plan for now increasing the 
profits^ and power of the banks by giving them ownership of 
the proposed National Reserve Association that is to control 
the public currency and entire money supply of the country. 
They should promptly and vigorously join with the people 
in demanding that the institution be absolutely owned and 
controlled by the Government of the United States. 

This course alone will prevent their neighbors and friends 
and the people generally believing that they are willing 
parties to the conspiracy of the big banks and Wall Street to 
rob the people and the Government of their rights and 
powers for the graft, profit and advantage of lawless and 
selfish private interests. 

If state banks and trust companies are wise they will 
oppose this "will you come into my parlor, said a spider to a 
fly" Aldrich proposition. They have nothing to gain and 
everything to lose by this Hon and lamb merger, for they 
must play the part of the lamb. They will not desire to join 
this National Bank- Wall Street Conspiracy and cause the 



CORPORATE CURRENCY 301 

people to believe that they are as selfish and criminal and 
unpatriotic as the majority of national banks. 

And state banks and trust companies camiot afford to 
allow national banks thus to increase their profit and power 
and their advantage over state institutions. National banks 
would entice away the deposits of state institutions by 



advertising that national banks alone arc "panic-proof." On 
the other hand it would be a great benefit and advantage, 
and no disadvantage, to state l^nks and trust companies to 
be allied with a great central reserve association or currency 
issuing body provided same was a public institution owned 
and controlled by the Government and strictly regulated by 
law. 



3W UNITED STATES MONEY vs. 

The crime of conspiracy statute above quoted, that has 
been violated by about 40,000 bank officers and directors, is 
the identical statute under which 54 labor union members 
recently were indicted and arrested or prosecuted by the 
United States Government under direction of the President. 
In one case it was conspiracy to violate the federal law 
regulating banks, and in the other it was conspiracy to 
violate the federal law against transporting d3mamite on 
railway trains. Justice must be impartial. <3in the Govern- 
ment justly or safely put the stripes on the few misguided 
working men and let the many offending bankers go free? 



CHAPTER XVIII. 
BANK CREDITS VS. GOVERNMENT CURRENCY. 

Banks Increase Cost of Living -— Business Done Too Much on 

Credit and Too Little on Cash Basis. 

There are two ways of doing business. One is to pay in 
cash, the other with credit — bank checks, notes and drafts. 
In cash transactions it costs the people nothing for use of 
the "medium of exchange" employed — the money, or cur- 
rency — because the Government coins or prints and issues 
it without charge. In credit transactions (and by "credit" 
we do not mean trusting, or selling on time) settled by 
check, note or draft, the hanks always receive a profit for 
the agency used as a substitute for money. They either get 
"interest" at 6 per cent, or other going rate, on the prom- 
issory note discounted to create a book account against 
which the "checks" are drawn, or "exchange" to pay for 
New York or other drafts used in place of cash. 

In New York City and some other places banks profit 
double. They get interest on the note discounted to create 
a checking account, then they charge for all outside checks 
drawn on similar accounts in other banks when receiving 
such checks for deposit. This plan gradually is being ex- 
tended throughout the country. And when customer checks 
out say but half the proceeds of the discounted note, the 
bank receives the equivalent of double interest, or 12 per 
cent. Offsettinpf this is the 2 per cent, 3 per cent or 4 per 
cent interest paid by banks on deposits, but usually this is 
only on cash or time deposits represented by "certificates 'of 
deposit." Few banks pay any interest on "checking ac- 
counts" created by discounting notes or depositing the 
checks of other people. They can well afford to pay that 
small rate on deposits of cash, because the cash becomes part 
of their "cash reserves" and enables them immediately to 
swell their loans of credit an amount equal to about ten 
times such cash. For example, a bank may pay ^ per cent 
per annum on a cash deposit of $1,000 because it at once 



304 UNITED STATES MONEY vs. 

then can charge and receive 6 per cent yearly on $io,cxx) of 
extra loans of "credit." This is the "inside" mysterious and 
Croesus-like "Holy of Holies" of the banking business. 
Two things must be obvious : 

1. It is for the financial interest of the banks to have the 
people do as little business on a cash basis and as much on a 
credit basis as possible, because banks supply all of the 
"credit mediums of exchange" and receive a good profit for 
doing so. 

2. It is for the financial interest of the people to do as 
much business on a cash basis and as little on a credit basis 
as possible, because the Government charges the people 
nothing for producing the cash for them and banks always 
charge for the use of credit. 

The development of business methods and practices have 
grown, or been so engineered by the banking system that the 
relative proportion of cash transactions has steadily de- 
creased and credit transactions increased until now it is con- 
ceded that of all business at least 95 per cent is done with 
credit and but 5 per cent with cash. This is partly due to 
the convenience of checks instead of cash, less bother in 
some transactions, but more to the constant temptation and 
encouragement by banks to solvent customers to over- 
expand their business by using credit instead of actual capi- 
tal ; for it is easier to go in debt to a batik than to provide 
cash capital to carry on a given business. 

Some idea of the size and weight of this bank burden 
upon the people and their business activities, because of the 
use of bank credit instead of cash almost exclusively in all 
of the business transactions of life, may be gathered from 
the official report of the 140 clearing houses of the United 
States for the year to September 30, 191 1. 

According to the U. S. Comptroller's report of December 
4, 191 1, in one year the volume of business settled by bank 
checks and drafts that went through clearing houses (not 
including checks cashed by banks on which they were 
drawn) was the colossal total of $159,373,450,000, almost 
one hundred and sixty billions of dollars. All of the annual 
crops of the soil are worth only seven to nine billion. All 
of the money in the United States (June 30, 191 1), coin and 
currency, in circulation, in bank reserves and in the treas- 
ury, was only $3,555,900,000. The total capital (known and 
estimated on June 7, 191 1) of the 28,551 banks and trust 
companies of the United States (national, 7,277 ; other re- 



CORPORATE CURRENCY 305 

porting banks and trust companies, 17,115) was but $2,032,- 
411,351, their surplus and undivided profits (being mostly 
excess profits earned but not divided and paid out as divi- 
dends) $2,105,574,839; deposits, $16,514,730,351; circula- 
tion (bank note currency), $681,740,513; making the total 
banking power of the United States (by Comptroller's re- 
port) ^1,334456,790, an increase during the year of $285,- 
212407, or over 13 per cent. 

So the banking power, entire money supply, and total 
value of all crops, combined amount only to less than $34,- 
000,000,000, or 21 per cent of the nearly $160,000,000,000 of 
credit represented by reported bank checks. In one way or 
another this entire business is made to yield such profits to 
the banks that they have been enabled to acctunulate, chiefly 
from excess net profits, $2,105,574,839 of surplus and undi- 
vided profits, or more than their total $2,032,411,351 capital, 
besides steadily paying unusually large dividends. While 
many banks annually earn 10, 20, 50 and some 100 per cent 
net on their capital stock, for the year ending June 30, 191 1, 
the average dividends paid by all of the national banks was 
11.38 per cent on their capital stock, and their average net 
earnings was 15.57 per cent. 

Cost of Living Increased. 

It would be interesting to know, and highly illuminating, 
just how much higher the cost of living has been made by 
this use of 160 billion dollars of bank checks as a substitute 
for Government currency as the chief medium of exchange 
in American business. Every dollar paid by a business man 
to the banks for such ''credit'^ is added as an item of cost 
and increases correspondingly the price of commodities to 
consumers. Therefore all of these rich and increasing 
profits made by banks are saddled directly upon the people. 
There is no way for them to escape this burden. It in- 
creases the prices of food, clothing, ever3rthing they buy. 
Advocates of a protective tariff claim that it tends to bar out 
the products of cheap foreign labor that if admitted free 
might tend somewhat to beat down prices and benefit con- 
sumers, but that it would thereby injure labor and agricul- 
ture by requiring less of the products of American factories 
and farms. And of course working men and farmers com«* 
prise the larger portion of the consumers of the country. 
Also, that if local industries do not combine into trusts or 
otherwise conspire to eliminate all genuine competition in 



3o6 UNITED STATES MONEY vs. 

order to keep prices high the tariff, by keeping out foreign 
products, may encourage the starting of so many industries 
in this country employing American labor that prices to con- 
sumers actually will be lowered instead of increased. This 
notwithstanding the tariff, because such local industries in 
competing with each other, if competition is real and unre- 
stricted, in order to get the business naturally will make low 
prices yielding only reasonable profits. At least this is the 
theory of protection. 

But a tariff not fixed by Congress, levied upon 95 per 
cent of all business by the banks in the form of charges for 
"credit,*' can in no way be avoided by the people unless the 
volume of Government currency is increased and the people 
do business more upon a cash basis. It should be remem- 
bered that the entire foreign commerce on which tariff is 
collected is less than one-tenth of the volume of domestic 
commerce on which the banks levy their credit tariff. 

The foreign commerce of the United States in 191 1 was: 
Exports, $2,013,549,000; imports, $1,527,945,000 (balance 
of trade, $485,604,000) ; total, $3,541494,000. The entire 
foreign commerce (exports and imports) of the twenty-nine 
leading nations was diirty billion dollars, or less than 20 
per cent of the 160 billion dollars of checks that went 
through the clearing houses of the United States last year. 
The total value of all manufactures of this cotmtry in 1909 
was but twenty billion dollars. 

And this bank-levied tariff may be duplicated many times 
on the same article. If the expense of producing the raw 
material, the selling price of same, the freight on it to the 
factory, the cost of working it into a finished article, the 
labor cost, the expense of administration and selling, the 
freight to the wholesaler, the price paid by wholesaler, the 
freight to retailer, the price paid by retailer and the price 
paid by the ultimate consumer, are all settled by bank 
checks it will be seen that to a greater or less extent the 
banks get the chance to make ten assessments for use of 
their "credit" against that one artide. Perhaps it is a 
common everyday household necessity and the whole ten 
assessments are added to the price and paid unknowingly 
but invariably by the consumer. The consumer pays it all 
and the banks get it all. No one else profits a dollar from 
the sale of bank credit. And whatever decrease of the use 
of bank credit may occur by reason of increase of the 
volume of business done on a cash basis tiie whole loss will 



CORPORATE CURRENCY 307 

fall upon the banks and the entire benefit will go to the 
people in the shape of lowered prices on all the things they 
must purchase. 

Have we not now smc^ed out the '^Senigambian in the 
woodpile" that always has and always will cause banks to 
fight the issuance of currency by the Government, and par- 
ticularly any serious increase of that currency whether it 
be uncovered "greenbacks" or treasury notes secured 
amply by a gold reserve? And the true although con- 
cealed reason why now they are trying to get Congress te 
prohibit the Government issuing any currency at all and to 
grant a monopoly of the issuance of all currency to a pri- 
vate corporation owned by the banks? Then they could 
make the people pay for the use of the pocket money they 
own as well as for use of bank credit, and the banks would 
get the other 5 per cent for which so long they have 
hungered. Then they would get a rake-off on 100 per 
cent instead of 95 per cent of all business transactions car- 
ried on by the people, with power in the banks to increase 
at will the size of such rake-off. 

Right now the banks by clearing house agreements are 
extending throughout the country the new plan of charging 
'"exchange" on outside checks deposited by their regular 
customers. If this becomes general (as it will if business 
men submit), if the rates charged were applied to the whole 
160 billion it and other new charges would increase the 
bank tax on business (and commerce) an amount nearly 
equal to half of the annual cost of running the Govern- 
ment of the United States. 

It is not proposed or desired to abolish bank credit or 
arbitrarily curtail or unduly or unfairly restrict its supply 
or use. Nor is it intended to diminish or limit the legiti- 
mate profits of banks by law so long as they deal justly by 
the people, giving them good service at reasonable cost and 
exercise their law-given privileges and powers honestly 
and impartially for the general welfare. 

But it is proposed and demanded that banks shall keep 
their restraining hand off the people's supply of public cur- 
rency; that they shall stop every attempt and action that 
tends to compel the people against their will and interest to 
buy more bank credit and use less Government currency. 
Laws should not be framed, as at the instigation of the banks 
they have been^ to force the people to do more business on 



308 



UNITED STATES MONEY vs. 



a credit and less on a cash basis solely to increase the 
profits of the banks at the cost of the people. 

On October 31, 1911, $744^1,715 of bank-note cur^ 
rency was in circulatton. Not a dollar of gold secures this 




T/r£ T'*^^ ^Ji^ r/iAfP tVJ^^A/ /'M GOJf/fi TO 
£STAl 

TH£ a 



vast bank currency. Banks want a gold reserve only be- 
hind Government currency. Banks pay this out over and 
over because it is not lawful money, is no good in their 
cash reserves, and because upon every doUar th^ are 



CORPORATE CURRENCY 309 

making a steady profit so long and only while it is out of 
their hands and in the hands of the people. The people 
do not have to accept bank-note currency because it is not a 
legal tender. Since December 21, 1863, the date of the 
first issue of national bank circulation, bank-note currency 
of the value of $5460,186435 has been issued by national 
banks that have received therefrom while it was out and 
unredeemed steady profits that were paid by the people. If 
this had all been Government currency the banks would 
have made less and the people would have paid less because 
the Government would have asked no profit for supplying 
such currency. 

It is thus seen that banks do not object to paper cur- 
rency. They only object to the Government issuing it 
without profit, or at all, because whatever Government cur- 
rency is issued reduces the quantity of bank currency and 
credit used, and this decreases the profits of the banks. 

All that is now asked is to lift the bank embargo on the 
free play of currency so that the people can use just as 
much or just as little such Government currency and pur- 
chased bank credit as they desire. Let the law of supply 
and demand be the sole regulator, the will and preference 
of the people determining the proportion of business to be 
conducted with bank credit and the amount to be done on a 
cash basis. 

Let the Monetary Council, hereinafter suggested, estab- 
lish and enforce a square deal between the banks and the 
people, the Government issuing all of the currency and the 
banks all of the credit, the people to use as much of each 
as they desire. Is not this right, business-like and just? 

Every dollar of currency so issued will be made sound, 
guaranteed by the Government, redeemable in gold, backed 
by an adequate gold reserve and always kept equal in value 
with gdd. The hanks can not question the soundness of 
such a currency, or frighten the people with the old cry of 
"irredeemable paper money," "inflated unsecured greeji- 
backs,** "rag-baby," etc., for it will have all the security 
proposed for the "Aldrich plan" currency and the direct 
guarantee of the Government besides. 



CHAPTER XIX. 
THE LEGAL TENDER "JOKER'* 

A New ProgTMsive Party?— ''Uwful Money" and «'Lef«l.T«idtf~ 
Defined— GoTemment Money ▼»• Corporate Currency. 

The next great American monetary struggle is to be 
around the issue, Government Money vs. Corporate Cur- 
rency. The report of the Monetary Commission has 
launched that issue in politics. The character and contents 
of its bill introduced in Congress on January 8, 191 2, pre- 
cipitates the fight. A vital political question of the most 
grave importance can not be kept out of politics just to ac- 
commodate and aid its bank and Wall Street promoters. 
The sly suggestion of Aldrich or the fiat of a President 
can not prevent the greatest political question since the 
civil war becoming a party question. No doubt the pro- 
moters of the Aldnch scheme desire in Congress and among 
the people to keep the 90 per cent who are opposed to the 
measure divided between the parties until the 10 per cent 
that never had any political principles, but plenty of legis- 
lative profits, as a balance of power can dicker and drive 
the bill through Congress. 

This is likely to be the leading issue in the campaign of 
1912. It should be made so. We believe one and probably 
both parties ultimately will declare against the Aldrich 
scheme. If one party indorses the plan the other party will 
win if it courageously fights the measure and the whole 
pack of ravenous wolves concealed behind it If the special 
mterests succeed in their attempt to bully or buy the nomi- 
nation of reactionary candidates by both parties the great 
masses of the people will believe that those parties are 
mere bought and paid for concubines of Wall Street and 
no doubt will organize the National Progressive Party. 
Forced to form by such considerations of £e highest duty 
and patriotism such a party should attract to its standard 
the 90 per cent of good men from both parties, north, 
south, east and west, and in a whirlwind campaign of 

310 



CORPORATE CURRENCY 31I 

popular indignation and aroused sentiment overwhelm Wall 
Street and all its allies and win victory in the first contest. 
Such a union of all unselfish citizens would be a great 
national blessing and the best guarantee of a safe, conserva- 
tive, orderly Government for the republic for all future time. 
The only alternative, the only hope for the people, the only 
way to preserve popular government in the republic, if 
neither republican or democratic parties will resist the all- 
devouring interests and champion the people's cause in the 
impending struggle to keep their money free and preserve 
their financial liberty will be for the patriots of all parties 
to unite and form a new party that will serve the people. 
Because the people politically are so evenly divided a very 
small number as a gipsy balance of power swung back and 
forth often has decided the fate of national elections and 
really ruled the republic. 

In 1884 a change of less than 1,000 votes in New York 
defeated Blaine and elected Cleveland. Think of 1,000 thus 
ruling. 10,000,000 voters ! President Harrison oflf ended the 
banks and Wall Street by signing the Sherman silver pur- 
chasing law of 1890 and by paying Gbvernment bonds out 
of the enormous treasury surplus instead of depositing the 
surplus in the banks without interest and extending the 
bonds so the banks could use them as a basis for bank-note 
currency. Therefore he was defeated and Cleveland was 
elected in 1892 relatively by a few thousand votes in close 
states turned by the influence and political activity of the 
banks. The people do not realize that the national banking 
system always has been a vast, powerful and alert nation- 
wide political machine managed by Wall Street. Wall 
Street knows the value of thus throwing the election to one 
side and then to the other. It shows both parties the vital 
power of the "interests" under the electoral college system 
of choosing Presidents (which should be abolished for the 
public good) and terrifies them into naming candidates 
acceptaWe to the "interests" and tends to induce subsequent 
legislative and executive, if not judicial, subserviency to the 
will and pleasure of high finance. To a large extent the 
people do not count. This is because politically they always 
play the game "tug of war," one-half pulling on one end 
and the rest on the other end. Wall Street and the big 
banks in the middle give a little push one way or the other 
and thus decide the contest. Just how long the people will 
(continue thus to be victimized is a question. This great 



UNITED STATES MONEY vs. 



h Is' 
If si 






^,g 






CORPORATE CURRENCY 313 

money issue on which their happiness and pocket-interest so 
largely depends may be the means of their political emanci- 
pation and cause party reorganization. The shadows cast 
by coming events already are in sight. The campaign of 
1912^ will be memorable and momentous. It may be the 
most sinister, corrupt and desperate in all history, for the 
"interests" are desperately playing for big stakes. 

Legal-Tender Quality, of Money. 

Part of Sec. 8, Art. I, of the United States Constitution, 
defining the powers of Congxess, says: 

"To coin money, regulate the value thereof, and of foreign 
coin and fix the standard of weights and measures : 
I To provide for the punishment of counterfeiting the 
securities and current coin of the United States" : 

"Sec. 10. No state shall * * *coin money, emit bills 
of credit ; make anything but gold and silver coin a tender 
in payment of debts; * * *»> 

On page 24 of "U. S. Treasury Circular No. 52" issued 
July I, 1910, by the Treasuxv Department, it says : 

"Legal-Tender Qualities of Ui«%rED States Money. — 

There are ten different kinds of money in circulation in the 

United States, namely, gold coin, standard silver dollars, 

I subsidiary silver, goM certificates, silver certificates, treasury 

I notes issued under the act of July 14, 1890, United States 

! notes (also called greenbacks aipd legal-tenders), national- 

I bank notes, and nickel and bronze coins. These forms of 

money are all available as circulation. While they do not all 

possess the full legal-tender quality, each kind has such 

attributes as to give it currency. The status of each kind 

is as follows : 

Gold coin is legal-tender at its nominal or face value for 
all debts, public and private, when not below standard 
weight and limit of tolerance prescribed by law ; and when 
below such standard and limit of tolerance it is legal tender 
in proportion to its weight. 

Standard silver dollars are legal tender at their nominal 
or face value in payment of all debts, public and private, 
without regard to amount, except where otherwise expressly 
stipulated in the contract. 

Subsidiary silver is legal tender for amount not exceeding 
$10 in any one payment. . 

Treasury notes of the act of July 14, j8po, are legaj tender 



314 UNITED STATES MONEY vs. 

for all debts, public and private, except where otherwise 
expressly stipulated in the contract. 

United States notes ('greenbacks or legal tenders') arc 
legal tender for all debts, public and private, except duties 
on imports and interest on the public debt. (Note — (a) 
United States notes upon resumption of specie payments, 
January i, 1879, became acceptable in pa3rment of duties on 
imports and have been freely received on that account since 
the above date, but the law has not been changed.) 

Gold certificates, silver certificates and national-bank notes 
are not legal tender, but both classes of certificates are 
receivable for all public dues, while national-bank notes are 
receivable for all public dues except duties on imports, and 
may be paid out by the government for all salaries and other 
debts and demands owing by the United States to indi- 
viduals, corporations and associations within the United 
States, except interest on the public debt and in redemption 
of the national currency. All national banks are required by 
law to receive the notes of other national banks at par. 

The minor coins of nickel and copper are kgal tender to 
the extent of 25 cents. 

Foreign coins are not legal tender — Section 3584 of the 
Revised Statutes of the United States provides that no for- 
eign coins shall be legal tender in the United States." 

"Legal tender" money is the only "lawful money." It is 
the kind everybody must under the law accept when ten- 
dered in pajrment of any debt or purchase. There may be 
non-legal tender currency like bank notes and gold certifi- 
cates, mere optional currency, used as a substitute for money. 
But this is good only so long as the other party does not 
care to refuse it. 

Gold is not money. If it was, then wedding rings, ear 
rings, spoons and other articles of eold would be money. 
Gold hidden by nature in the bowels of the earth is not 
money. Nor is silver, copper, nickel, paper or ink. These 
commodities all are used as substances on which to print or 
stamp the evidence of money. The parchment or paper is 
not a man's will. His will is his formed ideas or wishes. 
For convenience, safety, record, these wishes are written 
with ink on paper in due form. The document is called a 
will. So we call the paper or coin evidence, money. The 
will of the man is his act of formal decision. And the will 
of Congress expressed in form of law is the thing that 
creates money. It is an act of sovereignty. It is the statute 



CORPORATE CURRENCY 315 

forcing its acceptance by the people, making it legal tender 
for the pa)mient of debts, that breathes into those inanimate 
pieces of metal and paper the breath of life and vitalizes 
them into money. Without the statute they would remain 
mere commodities worth only their market price by weight. 
GoJd has been enhanced above iron in value largely because 
law has singled it out and made it the standard or measure 
of value by weight, thus giving it special value by creating a 
fictitious artificial demand. If every Government should 
demonetize gold by repealing their laws making gold the 
monetary standard the price of gold would go down to 
what the metal is worth in the arts as a mere commodity. 
The price would be very low because so small a portion is 
required in the arts. And less would be used if gold should 
cease to be a "precious" metal. 

Because creating money is an act of sovereignty, a func- 
tion of government exercised only by means of the will of 
the people as expressed in the law, the issuance of money 
should not be farmed out or delegated by the Government 
to any private individual or corporation for private profit or 
advantage. And for the same reasons this is true of any 
currency based on or issued under authority of law to be 
used in place of or as a substitute for money. Law and all 
benefits thereunder must be impartial and general for the 
good of all the people without special favor or discrimina- 
tion. To by law of Congress grant to a private corporation 
owned by the banks a monopoly of issuing the currency, 
and by law forcing the people to use such corporate currency 
and to pay to get it whatever the corporation and the banks 
may exact, is a dangerous departure in government likely to 
open the door to the g^nting of all kinds of special legisla- 
tive profits and immunities to politically powerful special 
interests while denying such privileges to the rest of the 
people. We are at "the parting of the ways." This bill if 
passed will be the entering wedge Opening the political 
pandora box and will permanently release a thousand evils 
and dangers that since 1776 have been kept securely impris- 
oned by the Constitution and the law through the wonderful 
foresight of the fathers or the kindly oversight of Provi- 
dence. 

Under the law the only "lawful money" is that which is 
a legal tender for the psyment of all debts public and private. 
It will never depreciate but always remain equal in value 
with gold because it can be used equally with gold in doing 



3i6 UNITED STATES MONEY vs. 

all of the things for which money is required. This is reason 
and it is history. Under acts of July 17 and August 5, 1861, 
the government issued $50,000,000 of paper currency called 
"demand notes" and $10,000,000 additional under act of 
February 12, 1862, the first paper national currency ever 
issued by the Government. The act of March 17, 1862, 
made this currency full leg^l tender for all debts public and 
private except interest on the public debt. This provision 
kept these original greenbacks from depreciating and they 
never were worth less than gold. But the banks and Wall 
Street financiers, as shown in another chapter, made such a 
fuss and brought such pressure on Congress that the $150,- 
000,000 greenbacks, U. S. notes issued under act of Febru- 
ary 25, 1862, $150,000,000 under act of July 11, 1862, and 
$150,000,000 March 3, 1863, a total of $450,000,000, were 
by law made only a "limited legal tender." The act of 
February 25, 1862, said : "And such notes herein authorized 
shall be receivable in payment of all taxes, internal duties, 
excises, debts, and demands of every kind due to the United 
States, except duties on imports, and of all claims and 
demands against the United States of every kind whatso- 
ever, except for interest upon bonds or notes, which shall be 
paid in coin, and shall also be lawful money and a legal 
tender in payment of all debts public and private within the 
United States, except duties on imports and interest as 
aforesaid." 

The "exception'' refusing their use to pay interest on 
Government bonds and notes did little harm because such 
interest then was relatively small. But when the Govern- 
ment by law, this "exception," refused to accept its own 
money in payment of duties in imports, the principal source 
of revenue to the Government, it denied the greenbacks the 
largest active market and was ofiicial notice to the world 
that the currency was to be discriminated against even by 
the Government issufng it. This "exception," discrimina- 
tion, and the use made thereof by Wall Street and the big 
banks in their manipulations by which the Government was 
forced to sell hundreds of millions of dollars of bonds for 
greenbacks at less than 50 cents on the dollar measured in 
gold, caused the rapid depreciation of this currency. And 
because the law required the Government to accept the first 
$60,000,000 of full legal tender greenbacks for duties on 
imports (not to pay interest on bonds and notes) such green- 
backs never depreciated, although the $450,000,000 of lim- 



CORPORATE CURRENCY 317 

ited legal tenders once depreciated to about 35 cents on the 
dollar as measured in gold. 

Bank-note currency depreciated to the same extent that 
the $450,000,000 greenbacks did, and for the same reason ; 
that is, because bank-note currency was not legal tender 
moriey. This is further convincing evidence that the sound- 
ness of currency chiefly depends on its being made legal 
tender by law. 

Much of this information is from "U. S. Treasury De- 
partment Circular No. 52," giving "Information respecting 
U. S. bonds, paper currency, coin, production of precious 
metals, etc.," issued July i, 1910. Readers are advised to 
get and read that public document. It can be obtained free 
on application to "The Secretary of the Treasury, Wash- 
ington, D. C./' or anyway, through a congressman or sen- 
ator. Note pages 24, 2^^ 28 and 29 for the official facts 
above stated. 

If it is true that making Government currency lawful 
money by a law making it full legal tender for all debts, 
public and private, will keep it always at par with gold, and 
that making it only a limited legal tender or ncm-legal tender 
may cause depreciation because of the discrimination, should 
not every dollar of currency issued under authority of any 
act of Congress be made, in the interest of the people and 
the Government's honor a full legal tender for all debts, 
public and private? If not, why? There is no legitimate 
reason. 

What possible excuse is there for inflicting upon the 
people vast issues of bank note and gold certificate currency 
that under the law is not lawful money but mere optional 
currency, utterly worthless for paying ordinary debts if the 
creditor cares to refuse to accept it? The whole wretched 
system has been fastened upon the country by the banks in 
their insane greed to discredit and keep down the volume 
and use of Government money and increase the demand for 
bank credit loans and bank currency from which banks 
derive a steady special profit. They have for 50 years used 
this legal tender "joker" and had it inserted in the laws of 
the land because the people did not understand its baneful 
character and subtle evil eflFect. And they have carried it to 
such length that only about 5 per cent of all the currency in 
the hands of the people is legal tender lawful money, 95 per 
cent being mere optional currency. 

It is time the people took matters into their own hands 



3i8 UNITED STATES MONEY vs. 

and drove the banks and Wall Street out of the temple of 
legislation and the executive departments of their Govern- 
ment. 

Henceforth every dollar of currency must be issued 
BY the Government and be a full LEa\L tender in 
anybody's hands for the payment of a dollar's worth 
OF debt anywhere at any time. There should be no let- 
up or compromise until every dollar outstanding under the 
authority of any law of the United States is of this high 
character and quality. 

National City Bank Letters. 

Following is a continuation of writer's correspondence 
with the National City Bank of New York from the chap- 
ter "Confession of Wall Street." These letters are inserted 
here because they have special reference to the questions of 
legal-tender and currency depreciation : 

"Milwaukee, Wis., Nov. 26, 191 1. 
The National City Bank, 

Wall Street, New York City. 

Gentlemen : I thank you for your reply of 24th inst. to 
my recent letter, and for the printed matter issued by you 
in support of the Aldrich plan. I shall read the public 
addresses in advocacy of that plan made by your president 
with pleasure and profit. 

It seems to be important that all currency be maintained 
at par. We all remember the evils due to the depreciated 
treasury notes, or 'greenbacks,' during the civil war. Were 
not they legal-tender to an extent at least equal to the pro- 
posed currency to be issued by the National Reserve Asso- 
ciation? They were issued by the Government, and this 
currency, unless also backed by the credit of the Govern- 
ment, will only be secured by this private association. Do 
you not think this may lead to a depreciated currency? 

The Aldrich plan seems in all important essentials to be 
practically the same as the central bank plan originated 
some years ago either by your bank or the New York 
Chamber of Commerce. Am I right in this comparison? 

Again thanking you, I am, 

Very truly yours, 

(Signed) Alfred O. Crozier.'' 



CORPORATE CURRENCY 319 

"The National City Bank of New York. 

New York, November 2% 191 1. 
Mr. Alfred O. Crozier, 
Plankinton House^ 

Milwaukee, Wisconsin. 

Dear Sir: Replying to your favor of November 26th, 
we beg to say that you are undoubtedly right in your theory 
that the 'greenbacks' issued during the civil war were legal- 
tender to practically the same extent as the currency it is 
proposed to permit the National Reserve Association to 
issue. We would, however, call to your attention the fact 
that the credit of the Government back of the 'greenbacks* 
was not sufficient to guard against depreciation in their 
value. It is hardly to be supposed, therefore, that placing 
the credit of the Government back of the notes to be issued 
by the Reserve Association would entirely guard against 
the difficulty you fear. The authorities fully recognized 
the danger of the greenbacks in our monetary system, and 
in the act of March 14, 1900, a greatly increased gold re- 
serve was provided, and there was also inserted in that act 
the provision that when United States notes are presented 
at the Treasury Department for redemption, they must first 
be es^changed for gold before being re-issued. Thus you 
will see tlmt an attempt was made to plade the gold stock 
in the reserve fund back of the greenbacks. 

If you will read paragraph 68 of the suggested plan for 
monetary legislation forwarded to you, you will see that it 
is therein provided that all note issues of the National Re- 
serve Association must be covered to the extent of at least 
one-third by gold or other lawful money, and the remain- 
ing portion by bankable commercial paper as herein defined 
or obligations of the United States, but no notes shall be 
issued whenever the lawful money so held shall fall below 
one-third of the notes outstanding. You will thus see that 
your statement that such notes would be secured only by 
this private association is hardly correct. The notes will 
be secured by this reserve of lawful money to the extent 
of one-third, and to the extent of the balance will be secured 
by commercial paper or Government obligation. It would 
appear that the legal tender quality of the notes backed by 
these ample provisions for reserve security back of them 
would guard against any depreciation. 

We shall endeavor to procure and send to you a copy 
of the plan originated some years ago by the New York 



320 UNITED STATES MONEY vs. 

Chamber of Commerce. From this you will be able to 
make your own compariscm with the plan now proposed by 
Senator Aldrich. There is undoubted similarity between 
the two plans, but we believe it is too much to say 
that they are practically the same, as Senator Aldrich has 
worked out, we believe, a much superior method of control 
of the proposed National Reserve Association than had 
been thought of at the time the New York Chamber of 
Commerce suggestion was made. 
We trust this satisfactorily answers your inquiry, and are, 

Very truly yours, 

W. H. Tappan'' (Asst. Cashier). 

"Milwaukee, Wis., Dec. 13, 1911. 
The National City Bank, 

Wall Street, New York City. 

Gentlemen: Returning here after an absence of some 
time, I find your valued favor of November 29, which I 
have read with interest and carefully considered. 

The integrity and soundness of all currency is so impor- 
tant to all of us, and the necessity of making no mistake in 
any system adopted so imperative, I am tempted to again 
trespass on your valuable time. 

You say that the 'Aldrich plan' currency will be legal- 
tender to no greater extent than was the depreciated 'green- 
back* of civil war times, and that 'greenbacks' depreciated 
in spite of the credit of the Government being back of them. 
And you hold, if I understand correctly, that the proposed 
currency of a private corporation, secured only by a gold 
reserve of one-third and commercial paper of various pri- 
vate parties for two-thirds the par value of such currency, 
and without any obligation on the Government to maintain 
such currency at par, will be safe and sound and likely 
always to be accepted by the people at par, as would a cur- 
rency issued or backed by the Federal Government and 
secured by an adequate gold reserve. Is this your view? 

As I now recall, there was one issue of 'greenbacks' 
amounting to $50,000,000 put out during the civil war that 
were by their terms and on their face a 'full legal tender' 
for all purposes. Am I right in suggesting that these never 
depreciated like the other greenbacks that were only a 
'limited legal-tender' usable for all purposes, except duties 
on imports and interest on the public debt ? Were not those 
'full legal tender' greenbacks, with nothing behind them but 



CORPORATE CURRENCY 321 

the faith and credit of the Government, the same as a gov- 
ernment bond, always worth their face in gold coin even 
when the 'limited legal-tender' greenbacks were worth 
about 35 cents on the dollar? 

If this is historically true, was it not the credit of the 
Government that kept the *full legal-tenders' at par, and the 
^exception' that caused the 'limited legal-tenders' to depre- 
date ? And is there not danger of depreciation of limited 
legal-tender' currency issued by a private corporation with- 
out the faith and credit of the Government being pledged 
to maintain it, even if secured by the relatively small gold 
reserve and commercial paper? 

Under the gold standard law you cite ( 1900) was not the 
faith and credit of the Government forever pledged to 
maintain at par with gold every dollar of the public 
currency? 

Will not the Aldrich plan change that gold standard act 
provision by authorizing an enormous paper currency, up- 
wards of a billion dollars of it, with no pledge or obligation 
by the Government to maintain it at par with gold or at any 
figure at all? Are we not taking a dangerous leap into 
monetary darkness by this plan? 

Hoping I may be set right if I am wrong in these matters 
and again thanking you, I am. 

Very truly yours, 

(Signed) Alfred O. Crozier/' 

"The National City Bank of New York. 

Capital $25,000,000. 
Surplus and Undivided Profits $25,000,000. 

New York, December 15, 191 1. 
Mr. Alfred O. Crozier, 
Plankinton House, 

Milwaukee; Wisconsin. 
Dear Sir: Acknowledging your favor of December 13th 
with reference to the Aldrich plan, we note that you class the 
bank note and the greenback together. We believe that you 
will secure a broader view of the subject from an address 
recently delivered in Racine by Mr. Joseph T. Talbert. 
While this address does not cover all the questions raised 
with reference to the greenback, still it so clearly differ- 
entiates the position and function of the greenback and the 
bank note that we believe it will be useful in clearing up 



322 UNITED STATES MONEY vs 




CA#r«M tZSOOOOOO 

•wavLU* mtfWV'Ott Morirs f 2S OOO 000 



OaWb^r 15 • 19X1, 



Ur. AlfMd c. Cro2i«r» 
Plankinton Eotise* 

miwwKM^ Visoonfiii* 

Omt Sin. 

JLoSmewledging your favor of 2)od«flib«r I3tb with 
r»fareao« to tlM lldrioh plan, tra nota that you olaaa tha Midi 
nota aad tha graenbaok togethar. 'i7a baXiava that yoa will a#» 
oura a broader vlaw of tha aubjaot from tn addraaa raoaatly da* 
lirarad in Baoina by Mr* Joaa^h T* talbart. miila thia ad^draaa 
doaa not ooirar all tha ^uaationa raiaad with TPttarano^ to tha. 
craaabaakf atill it ao olaarly dif farantiataa tha poaitlon and 
fODOtioA of tha eraanbaok and tha bank not« thalT wa baliava it 
will ba uaafVil in olaarinc up doubta nOdoh yoa aaan to hftf* fith 
rafaranoa to thia aubjaot* 

«• tafea plaaaora in foriivding* ttndaf aaparct* adfir* 
a OQpy of thia addnaa, wbioh wa hopa will raaoh you proavtlf* 

Toura vaiy truly* 

Aaaiati^/Catfiiar* 



CORPORATE CURRENCY 323 

doubts which you seem to have with reference to this sub- 
ject. 

We take pleasure in forwarding, under separate cover, a 
copy of this address, which we hope will reach you promptly. 

Yours very truly, 
(Signed) Thos. A. Reynolds, 

Assistant Cashier." 

Evidently the bank could not find or give any' explanation 
that would aid the Aldrich plan, of the historic fact it could 
not controvert, that the first $50,000,000 of legal tender 
greenbacks never depreciated while the $450,000,000 of 
limited legal tender greenbacks had depreciated. So the 
bank in its reply makes no answer to writer's letter on that 
vital matter, the most important question in the impending 
struggle, but refers him to the speech of Banker Talbert 
(vice-president of National City Bank and director of Con- 
tinental and Commercial National Bank of Chicago) which 
on examination was found to say nothing whatever on that 
subject. 

Thus we find the biggest and greatest bank in the United 
States, that commands the greatest expert financial minds 
in the country, and has upon its directing board representa- 
tives of all of the powerful Wall Street interests that domi- 
nate the entire national banking system, the mammoth in- 
surance companies, the railroads and the trusts of the United 
States, actually unable or unwilling to attempt to explain 
why legal tender money did not depreciate while limited 
legal tender currency badly depreciated. 

This is not criticism. It is evidence of good sense, the 
sudden retreat of the bank when it found the water getting 
too deep and it could not swim. 

The Aldrich bill does not invest the proposed corporate 
currency with half the legal tender power enjoyed even by 
the $450,000,000 of limited legal tender greenbacks that 
depreciated. It is not to be made "lawful money" at all. It 
will not be a tender for the payment of ordinary debts 
between individuals. 

The commission's Aldrich bill reads : 

"Sec. 53 — ^The circulating notes of the National Reserve 
Association shall be received at par in payment of all taxes, 
excises, and other dues to the United States, and for all 
salaries and other debts and demands owing by the United 
States to individuals, firms, corporations or associations. 



324 UNITED STATES MONEY vs. 

except obligations of the Government which are by their 
terms specifically payable in gold, and for all debts due from 
or by one bank or trust company to another, and for all 
obligations due to any bank or trust company/' 

This is all there is on this subject in the bill. The cor- 
porate currency would not be a tender between individuals, 
or between any individual and any corporation other than 
banks and trust companies. It will be optional currency, not 
"lawful money." Corporate currency should not be legal 
tender "lawful money," because that would be forcing the 
people by law to accept the corporation currency for the 
exclusive profit and benefit of the corporation. That would 
be a wrongful use of law. The foundation is to be laid by 
the Aldrich bill to work oflf on the people another billion 
dollars of currency not lawful money, and it is said not to 
be guaranteed by the Government, but be merely an obliga- 
tion of a private corporation, the obligation or debts of 
which will aggregate ultimately more than ten times its 
entire cash capital. 

No wonder the National City Bank hastily dropped the 
subject. In its letter of November 29, 191 1, the bank itself 
cited the fact that greenbacks even with the whole credit of 
the Federal Government behind them, and only $450,000,000 
outstanding, depreciated more than 50 per cent. How then 
can it be expected that the National Reserve Association, 
with only $100,000,000 of cash capital and perhaps a 
billion dollars of liabilities, can, without any Government 
guarantee or assistance, keep its billion dollar issue of cur- 
rency from depreciation, and at par? Especially so, when 
it is not even made "lawful money," or as much a legal 
tender as the Government greenbacks that depreciated in 
spite of the support of the Government, solely because they 
were not made full legal-tender ? It is a wildcat scheme and 
it will be a wildcat corporate paper currency like that 
emitted by the banks and worked off on the people in vast 
quantities before the Civil War by confidence game methods. 
It is a reckless, dangerous experiment. 

The only possible reply is the proposed gold reserve of 
SSVz P^^ <^^^t ''required/' but with no provision or penalty 
to enforce it. But if such a gold reserve mil make safe and 
sound a vast issue of corporate paper currency that is not 
full legal-tender and is only the obligation of a private cor- 
poration and not of the Government, then why would not 
the same size ^old reserve make safe and sound the same 



CORPORATE CURRENCY 325 

sise issue of Gaverni%ent currency that is a full legal-tender 
for all debts public and private, and is backed by the entire 
faith, credit, taxing and bonding power of the Government 
of the greatest nation on earth? 

There ! That's the conundrum. That is the one big ques- 
tion in all this controversy. The bank could feel it coming, 
so it "flew the coop" and escaped. 

But the people can and will answer the question that the 
bank dodged, for the reasoning is simple and plain and the 
evidence is oflicial, convincing and conclusive. 

While they did not dare openly to propose it at first, either 
before the Aldrich bill become^ law or by an amendment in 
after years the Government will be made liable for all cur- 
rency issued by this corporation, will be made an accommo- 
dation indorser on the corporation's notes for a billion 
dollars, even if it would not be obligated from the beginning 
under the statute heretofore icited. Absence of any pro- 
vision in the pending bill expressly stating that in no way 
shall the Government be liable, is significant. And the re- 
markable and conflicting letters from various members of 
the Monetary Commission and the big banks printed in 
preceding chapters give the whole thing a sinister appear- 
ance. 



A 



CHAPTER XX. 
REORGANIZING THE MONEY SUPPLY. 

New System, GoTemment Money Secured by Gold, Instead of 
Unlimited Optional Corporate Cnrrency. 

On June 30, 191 1, there .was in circulation $930,367,929 
of gold certificates and $698,532,060 of bank-note currency, 
total $1,628,899,989. This is over half of the $3,214,002,595 
that comprised the entire stock of all kinds of money of 
the United States on that date, in circulation, in the banks 
and in the Treasury. Yet not one dollar of those vast issues 
of gold certificates and bank-note currency is legal-tender 
"lawful money." It is all mere optional currency that any- 
body can legally refuse when it is tendered in payment of an 
ordinary debt. There are cases where this has worked 
great wrong and hardship. One reported instance may be 
cited to illustrate. Some western men had discovered and 
developed a valuable mine to a point where there was ore 
enough in sight to show to a certainty that the property 
was sound and of great value. They needed money to build 
a large plant and operate the property. They went to 
Wall Street. After careful investigation the New York 
"bankers" agreed to furnish the money. Instead of iohi- 
ing in the deal they put their money in as a "loan se- 
cured by mortgage on the mine. It was made a short- 
term mortgage. It came due before the plant could be fin- 
ished and operated to make the mine yield enough to pay 
the debt. Payment was demanded and the mortgage for 
about $150,000 foreclosed. The western men finally raised 
the money elsewhere and on the last day of redemption ten- 
dered it to the sheriflF in settlement. The eastern lawyer 
representing the Wall Street people found that consideraWe 
of the $150,000 was gold certificates and some bank-note 
currency. These not being "lawful money" he refused the 
tender and demanded pajrment in "lawful money." There 
was then no time to go from the distant county to a bank 
in a large city to get the necessary gold or greenbacks, 

326 



CORPORATE CURRENCY 327 

the "lawful money." The western men thus were robbed of 
their property and the rich Wall Street sharpers got it, 
as was their aim from the beginning, for a mere fraction 
of its value. The legal-tender "joker" in the law enabled 
them to do it legally. 

Few people know that bank currency is not legal-tender, 
and not one in ten thousand understand that gold certiii- 
cateSy with 100 per cent in gold deposited in the Treas- 
ury are mere "warehouse receipts' instead of "lawful 
money" and are useless whenever the other party cares to 
refuse them. The bankers who got this joker grafted into 
the laws know, but the masses of the people are kept 
ignorant of these matters so vital to their interests and 
welfare. It is a shameless fraud upon the people to which 
the Government has been made a guilty party. 

Very little gold or greenbacks are in the hands of the 
people.' This lawful money is largely kept by the banks 
in their "lawful money legal reserves." It has been esti- 
mated that of all the money in actual circulation among 
the people only about 5 per cent is lawful money, the other 
95 P^ cent being mere optional paper currency. And now 
the Aldrich plan would authorize a vast unlimited volume 
of corporate currency, not guaranteed at all by the Gov- 
ernment, to be worked off on the people by the banks in 
the shape of payrolls and otherwise, not one dollar of 
which will be legal-tender lawful money, all being only 
optional corporate currency. 

It is time for the people to call a halt on all this tmfair 
and injurious juggling of their money supply and its debt- 
paying qualities, done by the banks for their profit and 
advantage ; done to discredit and handicap Government cur- 
rency, the people's own money, in the interest of corporate 
bank currency. 

If present public officials are faithless and will not give 
relief and protection to the people against the soulless 
rapacity and greed of the special interests the people should 
make it their first business to choose new and honest pub- 
lic servants. There is no matter more vital to the happi- 
ness and pocket of every man, whether he carries a dinner- 
pail or rides in his automobile. 

Now that the banks have raised the question and forced 
the issue upon the country, the people should demand and 
see that it is settled right. Except the coined metal money, 
every dollar of outstanding currency. Government and bank' 



CORPORATE CURRENCY 329 

note, should be gradually replaced with just one kind of 
Government currency, issued in convenient denominations. 
Every dollar shall be lawful money, full legal-tender for all 
debts public and private, redeemable in gold, secured by an 
adequate reserve of gold, and guaranteed, the same as bonds, 
by the whole faith and credit of the Government of the 
United States. This is the only practicable course if Con- 
gress, the Government j is to be fair and honest with the 
people. 

The $1,163,901,183.56 of gold in possession of the Federal 
Treasury June 30, 191 1, is sufficient, if this suggested mone- 
tary revision is adopted, to constitute a 50 per cent reserve 
of gold to secure an issue of $2,327,802,366 of legal-tender 
Government paper currency. This is more than enough 
to replace the $930,367,929 of gold certificates, $698,532,060 
of bank-note currency and $346,681,016 of United States 
notes, or greenbacks, which together amount only to $1,975,- 
581,005. 

The promoters of the Aldrich plan can not question the 
adequacy of a 50 per cent gold reserve or the soundnes"^ 
of such a Government currency, for that is all they pro- 
pose to "secure" a vast paper currency to be emitted by 
a private corporation without any Government guarantee. 
In fact the data supplied by the monetary commission at- 
tempted to show that by the experience of Europe a gold 
reserve of 335^^ per cent is ample security for an issue of 
currency, and the bill of the commission now pending in 
Congress permits the Reserve Association to run its gold 
reserve down to 33j^ per cent. And this 33^^ per cent 
reserve can be all greenbacks, without one dollar of actual 
gold. If that is safe for a corporation surely it is for the 
Government, with all its unlimited taxing power, splendid 
credit, vast resources, and power to issue bonds to buy 
gold without restriction or limit under the Gold Standard 
Act of March 14, 1900. So without buying another dollar 
of gold, using only what the Government now possesses, 
$1,163,901,183, not in circulation but in the hands of the 
Treasury, a total legal-tender Government currency amount- 
ing to $3,491,703,529 would be possible without the gold re- 
serve falling below 333^ per cent. This is more paper cur- 
rency probably than the country will require during the next 
forty years. And when it needs more the Government can 
get all the gold it wants as the world's gold production 
goes on increasing each year, simply by issuing its redeem- 



330 UNITED STATES MONEY vs- 

able, gold secured, Government guaranteed, full legal-tender 
lawful money circulating notes, or currency, to pay for 
same. And each dollar of gold so bought safely can be 
made the basis for two or three dollars of additional Gov- 
ernment currency. 

It is well always to keep in mind that one of the chief 
objects in forming this great bank trust, this vast money 
combine, is to corner and so regulate the supply of money 
and credit that incorporated wealth will get all and the 
people none of the benefit due to the providential increase 
in the world's gold production. If increase of gold increases 
the prices of property and labor it will be offset by a gen- 
eral increase of interest rates when loanable funds all are 
under one central control with no serious competition for big 
loans. And if later a falling gold production decreases the 
prices of all property and labor, interest rates arbitrarily 
can be kept high and thus automatically increase the value 
of all bond wealth measured in property or labor. 

This splendid volume of $930,367,929 of gold certificate 
currency, and the equal amount of gold in the Treasury se- 
curing the same, all cost the Government practically nothing, 
only the nominal cost of coinage. Miners and other owners 
of gold bullion for sale simply deposited their gold at the 
Government's assay offices or the three mints and the gold 
was paid for with U, S. gold certificates. This automatically 
increased the Government's stock of gold, expanded the 
volume of the public currency and put the gold currency 
into general circulation. A gold certificate is the Govern- 
ment's promise to pay back on demand an equal amount of 
gold. But the miner does not want his gold back. He 
wanted to market his gold production. And he has more 
to sell each year. He never will ask for a return of the 
gold. All he wanted was his pay in something he could 
use as money at par for deposit in the bank or to pay his 
workmen for mining more gold. He puts the gold certifi- 
cates into circulation. They are payable to bearer. They 
are used as money. Anybody can present them for re- 
demption and get their face in gold coin. But usually no 
one wants the gold. The paper certificates are more con- 
venient. Holders only want to know that they could get 
gold if they desired, or that the currency is sound and 
worth par. Usually it is only when actual gold is required 
to settle some international balance that gold certificates are 
presented for redemption. A very small proportion are pre- 



CORPORATE CURRENCY 331 

seated and the actual gold demanded. The quantity of 
money has increased faster than population. The per capita 
circulation was: 

1862 $10.23 

1865 20.58 

1878 15.32 

1888 22.88 

1898 25.19 

1900 26.93 

1908 34.72 

1910 34.33 

Of the United States gpld production of $96,269,100 in 
191 1, $33,756,546 was used in the arts and $62,512,546 for 
monetary purposes. As original deposits of gold made with 
the Treasury in 191 1, for which gold certificates were given 
in payment amounted to $175,383,090, it will be seen that 
much gold came from abroad, nearly two-thirds. The 
$485,604,000 excess of exports over imports explains this. 
Although the Act of March 3, 1863, authorized this receipt 
of gold and issuance of gold certificates, on July i, 1889, 
there was only $154,048,552 of gold certificates outstanding, 
or less than last year's net increase. 

With this big international trade balance in our favor, 
hundreds of millions annually, all settled with gold, there 
should be no doubt of the Government having ample gold 
to protect all the Government currency needed to replace 
all forms of paper currency. 

It is an unanswerable example, this creation of $930,367,- 
929 of Government paper currency, gold certificates se- 
cured by a 100 per cent gold reserve, obtained practically 
without expense to the Government, all of it except $154,- 
048,552 since 1889. If the gold reserve basis instead of 
being 1 00 per cent had been 50 per centj the gold paper 
currency instead of being $930,367,929 would be $1,860,- 
735*858. If the gold reserve basis had been 33J4 per cent, 
gold paper currency now would be $2,791,103,787. So there 
can be no question as to the soundness of the proposed gold 
secured Government currency or the sufficiency of the supply 
of gold to protect the same. 

The only remaining question is the danger of over- 
inflation. This would not aflFect the soundness of the cur- 
rency because that is insured by the Government guaran- 



332 UNITED STATES MONEY vs. 

tee and the gold reserve. The banks and the monetary com- 
mission concede this. But the banks are afraid that if the 
Government controls the issuance and volume of money 
the people sometime may induce it to issue so much that 
the people will do more business on a cash basis and less 
with credit bought from banks. And Wall Street and its 
foreign clients are afraid that increase of Government cur- 
rency will tend to decrease the demand for gold and the 
value of bonds payable in gold, or in other words, increase 
the prices of securities (except gold bonds), property and 
labor as measured in gold. So Wall Street, the Roth- 
schilds and the banks are unwilling to trust the people and 
Government of the United States to run their own affairs 
in a sane and rational manner and propose by the Aldrich 
plan that the Government abdicate and turn the whole thing 
over to the banks to be run for the benefit and profit of 
the banks, Wall street and the Rothschilds instead of the 
people of the United States. They want their private cor- 
poration appointed receiver or guardian of the republic. But 
the people know that there is far greater danger from exces- 
sive contraction of the currency if the banks control than 
there is from excessive expansion if the Government of 
the republic continues to exercise its constitutional functions 
in the matter. So the people must "stay in the saddle" 

AND KEEP CONTROL THROUGH THEIR GOVERNMENT OF THE 
POWER TO REGULATE THE VOLUME OF THE PUBLIC CURRENCY, 
THEIR MONEY SUPPLY. It WOULD BE SUICIDE TO DO OTHER- 
WISE. We should remember that inflation of bank credit has 
the same effect as inflation of the currency, only it is a ten- 
fold greater danger. It would be more sensible for the Gov- 
ernment to grant to a private corporation for its profit a 
monopoly of issuing and fixing the price and quantity of all 
postage stamps than to grant private control of the public 
currency. 

Wall Street and the banks carefully laid a trap for the 
people and now have walked into it themselves. To obtain 
a corporation currency under private control they have 
openly committed themselves so that they cannot oppose a 
Government currency of the kind herein proposed without 
making themselves ridiculous. This is what we have long 
waited for, and the people should not delay in pressing their 
advantage and opportunity to get an adequate and sound 
public currency under Government control. 

It is only necessary to pass a simple act making all gold 



CORPORATE CURRENCY 333 

certificates a full legal-tender to make them as valuable to 
the people for paying debts as they were, by special act of 
1907 made to the banks for legal reserve purposes. And 
as gold certificates come back to the Government in pay- 
ment of duties and taxes they can be cancelled and new 
national currency issued in their place on a 50 per cent gold 
reserve basis. As this currency gradually expands at the 
2 for I ratio bank-note currency can be gradually called in 
and cancelled and the Government bonds be paid off out 
of any available surplus. The transition will be easy and 
natural and do no harm or injitfy to the legitimate interests 
of the banks or anyone else. 

The law can fix the gold reserve basis as 50 per cent, 
with an emergency provision by which the volume of cur- 
rency can be suddenly expanded to a 33 J^ per cent gold 
reserve basis, this emergency issue to be loaned to the 
banks only at such rates as will insure its prompt return 
to the Government when the emergency is past. This would 
keep an extra emergency currency always available and 
ready amounting to more than a billion dollars. The first 
$200,000,000, enough to move the annual crop, could be fur- 
nished during crop marketing at moderate rates, the bal- 
ance at emergency rates. This plan would guard against 
the danger of panics far better than the Aldrich plan ; it 
would not be giving private interests power by excessive 
contraction to cause panics, and it would do much to pre- 
vent panics altogether by helping to remove the causes of 
panics. 

Providence truly has shaped events to make it possible for 
the people to now free themselves from the present expensive 
and dangerous bank and Wall Street domination of their 
money supply. Every condition is right and the time is 
ripe. A definite plan is suggested in the next chapter. The 
change can be made by one simple act of Congress and with 
practically no expense to the Government. This is because 
the Government right now has ample gold to make the 
chane^e. It will make it possible for the Government ulti- 
mately to save nearly $10,000,000 now going as profits to 
the banks and about $20,000,000 interest on the public debt 
every year. And it will obtain from the banks a handsome 
annual revenue by charging the banks a fair and reasonable 
price for the use of Government currency for their cash 
reserves and to put into circulation among the people. 

There can be no opposition to this alternative olan bv 



334 UNITED STATES MONEY vs. 

any man who has faith in the soberness and soundness 
of the government of the republic unless that man is a 
banker or financier seeking unjustly and improperly to use 
the powers and laws of government for his private profit 
and special advantage. On the other hand, if the Aldrich 
bill becomes law, the Government will be firmly obligated 
to pay out $1485,024,050 just for. interest on the $963,349,- 
390 of 2 per cent Government bonds which the measure 
refunds for fifty years at 3 per cent 



CHAPTER XXI. 
UNITED STATES MONETARY COUNCIL. 

A New Cumencj and Banking Plan. 

Instead of the Aldrich plan for a private central bank 
named ''National Reserve Association," it is suggested that 
Congress create a responsible public institution to be called 
^'United States Monetary Council/^ with original, exclusive 
and supreme authority for the Government over all mone- 
tary and banking matters. It shall not be a mere commission 
or board, but a new, distinct and separate coordinate or 
subsidiary branch of the Government with the same control 
over its delegated functions that the legislative, executive 
and judicial departments possess over their respective 
functions. 

To that end, subject to such modification of details as 
may appear wise, it is proposed : 

1. The "United States Monetary Council'* shajl be 
created by Act of Congress, and afterwards made perma- 
nent by amendment to the Constitution. It shall be a new, 
distinct, coordinate or subsidiary branch of the Government 
with original, exclusive and supreme authority over all mat- 
ters within the functions expressly delegated by the creating 
legislative act. Congress shall have the same control over 
such council as it has over the Executive and Judicial de- 
partments, and no more. The council shall have original, 
exclusive and supreme control for the Government of all 
monetary and banking matters, and such other things as at 
any time may be expressly delegated to it by Act of 
Congress. 

2. The council shall consist of seventy-five members 
called "governors," a majority being a quorum. The Chief 
Justice of the Supreme Court, Vice-President, Speaker of 
the House, Secretary of the Treasury and Secretary of 
Commerce and Labor shall be ex-officio members (each 
having power to appoint an alternate to act in his stead 
at any meeting), the other seventy to be appointed by the 

335 



I 

i: 

!i! 

t II 



ill- 






■ii" 



11 






CORPORATE CURRENCY 337 

President, one on the mandatory nomination of the governor 
or vote of the people of each state without confirmation, the 
other twenty-two by and with the advice and consent of the 
Senate. The term shall be four years, the appointed mem- 
bers to be so arranged that one-half of those nominated by 
states and one-half of those confirmed by the Senate will 
go out of office each two years, the President in the same 
manner appointing their successors and filling any vacan- 
cies. Impeachment for cause by the council shall lie against 
any governor or elected officer of the council. By majority 
vote the people of any state may "recall" its representative 
and substitute another "governor." 

As the National City Bank has 24 directors. National 
Bank of Commerce 40, Continental and Commercial Na- 
tional 44, total 108, and the proposed National Reserve 
Association would have 46, it would appear that 75 is a 
reasonable membership for the United States Monetary 
Council, representing the whole country. 

This plan will insure against any politics or partisan- 
ship in the operations of the council because both parties 
always will have influential members on the inside ready 
instantly to block by publicity any attempt improperly to 
use the powers of the council. It is a complete guard 
ag^ainst Wall Street influences. This plan also insures to 
every state representation and fair treatment and will gain 
for the council and its acts general public confidence, and 
thus establish a sound, stable, permanent and elastic system 
of banking and currency adapted to the changing needs of 
the country. This deliberative and responsible public body 
will forever protect the country and its business against 
the panic-inciting and dangerous evils of excessive currency 
and credit inflation and contraction. It would make panics 
impossible. 

3. The council from its membership shall elect four per- 
sons by open ballot to serve for one, two, three and four 
years respectively, the one having the shortest time to serve 
to be president and the three others vice-presidents. A new 
vice-president to so serve four years shall be similarly 
elected each year. 

The council shall appoint the Comptroller of the Currency, 
and such other officers, agents and employees as it may 
deem best and all standing and special committees and shall 
have power to dismiss any appointee. It shall fix the sala- 
ries of all elected officers and appointees, same to be paid 



338 UNITED STATES MONEY vs. 

out of funds controlled by the council; but the salaries or 
compensation of governors shall be specified in the Act of * 
Congress creating the council and paid out of funds coi>- 
trolled by the council. It is suggested that the position 
be largely honorary, without salary, each governor receiving 
say $25 per day while necessarily absent from his home and 
his actual railroad fare. This would divorce the positions 
from the scramble for political spoils and command from 
each state a man of the highest character and standing who 
would serve as a patriotic duty and for the dignity and high 
honor conferred. 

4. The executive committee shall consist of fifteen mem- 
bers. The president and three vice-presidents of the coun- 
cil and the G>mptroller of the Currency shall be ex-officio 
members, the other ten to be appointed by the council from 
among its meijfibers or otherwise. These ten should be 
trained and experienced financial experts of the highest 
standing and character, paid whatever their valuable serv- 
ices may be worth. 

The routine affairs of the council and its branches all shall 
be under the management of the executive committee, sub- 
ject to the supervision of the council and its committees 
and under its rules, regulations and by-laws, which council 
is authorized to adopt, alter or repeal, same to be not incon- 
sistent with law or the act creating the counciL This 
guarantees careful, efficient and intelligent business man- 
agement of the highest order. 

5. The regular annual session of the council shall be in 
February, at Washington, D. C, which shall be the head- 
quarters of the council ; other sessions can be held quarterly, 
or only on call. Branches established in various parts of the 
country for business convenience shall be organized by the 
executive committee on plans approved by council. 

6. Every governor, officer, appointee, agent or employee 
of the council or person acting under its authority shall be 
selected because of special fitness, without regard to their 
political views, be deemed public officials and shall take the 
usual oath of office required by law. And before the annual 
meeting each year every such elected officer, appointee, 
agent and employee shall file with the council his written 
declaration under oath stating that during his service he has 
not wilfully or knowingly violated his oath of office and to 
the best of his knowledge and belief always has in every- 
thing been faithful to his duties and public trust. Any false 



CORPORATE CURRENCY 339 

declaration shall be made perjury, punishable unjder the crim- 
inal statutes. 

Any attempt improperly to use the powers or functions of 
the council by any person charged with the exercise of any 
of such powers or functions, and any attempt by any person 
to induce such improper use' of such powers or functions, 
shall under the penal statutes be made a crime severely pun- 
ishable by fine, or imprisonment, or both. 

7. The council shall have full, exclusive and supreme 
control of the issuance and disposition of all coin and pub- 
lic currency, but every dollar shall be full legal-tender for 
all debts public and private, redeemable at par on demand, 
in gold when required, secured by a gold reserve of at 
least 33j^ per cent. 

Council may put such currency into circulation through 
national and state banks and trust companies on such 
terms, security and conditions as it may from time to time 
prescribe, same to be impartial and uniform throughout the 
United States and so far as practicable in accordance with 
general regulations formally adopted and publicly announced 
by the council. It may create a. general discount market 
and rediscount for such banks and trust companies first- 
class commercial paper under proper safeguards, fixing from 
time to time its general uniform rate of discount, using for 
such purposes its currency and the deposits made with the 
council by the banks and trust companies and the Govern- 
ment, which shall be council's only depositors. The Govern- 
ment shall deposit all public moneys with the council and 
make all its disbursements through the council. The council 
will not be a bank and shall not do general banking business 
in competition with banks. 

Every national bank and every participating state bank 
or trust company shall deposit with council all of its legal 
• cash reserves not kept in its own vaults, and in any event 
at least two-thirds of its required legal reserve, the legal 
cash reserve of all such banks to be by law reduced to a 
minimum of 12 per cent of their totsd deposit liabilities. 
Banks may sell drafts against this central deposit, instead 
of New York drafts. The interest to be allowed to the 
Government and the banks on deposits, if any, and charged 
for currency and rediscounting are factors likely to change 
with changing, conditions from time to time and safely can 
be left to the wise judgment and discretion of council and 
its experienced executive committee to be always adjust/^ 



340 UNITED STATES MONEY vs. 

on a fair business basis with reason and justice in the light 
of all circumstances then existing and by rule of the square 
deal. 

The council will be entirely self-supporting and also will 
furnish to the public treasury a very large and steady rev- 
enue easily obtained without any unfair burden to business 
or the banks, paid in return for the invaluable service and 
protection rendered by the council and for the valuable im- 
munities and privileges conferred by law upon banks under 
which they have a monopoly of the right to receive deposits 
and to loan at interest their mere credit to an amount aver- 
aging ten times their net cash assets. As the Government 
and its laws make this possible the banks should pay to the 
Government whatever such privileges reasonably are worth 
to the banks. Any private business would be ruined by 
such unbusinesslike practices as the turning over of hun- 
dreds of millions of Government money to the banks 
absolutely free or for a nominal i per cent. The council, 
will put the matter on a business basis. 

This council plan and its branches puts each city on equal 
footing, breaks the financial monopoly of New York, takes 
bank cash reserves out of Wall Street, "mobilizes" them in 
''one central reservoir/' there to be always ready for instant 
use to extinguish a "financial conflagration" occurring in 
any part of the country, and for constant daily use in all 
parts of the United States where required by the ever fluctu- 
ating demands of business. Genuine and safe elasticity of 
the currency, made to automatically respond to the rise and 
fall of the volume of trade and commerce and the marketing 
of crops, without danger of arbitrary manipulation for 
selfish purposes, would thus be firmly and permanently estab- 
lished. With all its powers Wall Street then could not 
cause general panic or endanger the banks anywhere in the 
country with fatal "runs" by frightened depositors. Every 
bank is left free and independent, and yet the resources of 
24,392 banks and of the Federal Government are com- 
bined through the council for the protection of each bank, 
depositors, business borrowers and the public generally. A 
panic then would be harmless. 

8. Council shall maintain the gold standard in accordance 
with the Act of March 14, 1900, and a gold reserve of not 
less than 33J4 per cent of all Government paper currency 
of every kind in actual circulation outside of the public 
treasury and council, gradually retiring all bank-note cur- 



CORPORATE CURRENCY 341 

rency, greenbacks and gold and silver certificates, substi- 
tuting the uniform, full legal-tender, redeemable, gold- 
secured, national currency proposed by this plan. It shall 
have power to acquire at par from the banks 2 per cetit 
U. S. bonds used as a basis of circulation as the bank- 
note currency is retired, paying for same with such new 
public national currency. This, in time, would extinguish 
the entire interest-bearing public debt ($963,340,390) with 
noninterest-bearing currency without materially increasing 
the volume of public currency. In this way the Govern- 
ment would save the $1,485,024,050 of future bond interest 
imposed by the fifty-year refunding scheme of the Aldrich 
plan and $963,349,390, the amount of outstanding 2 per cent 
ionds to be exchanged for currency, total $2,448,373440; 
also the millions of currency burned or destroyed by other 
accident — ^the benefit from which under the Aldrich plan 
would go to the banks. And the Government also would 
get pay for use of its surplus revenues. 

It shall be lawful for any holder of national currency to 
present same and demand the actual gold for any legiti- 
mate business objects, but organized raids upon the, public 
gold reserves made for the purpose of embarrassing the 
Government or forcing the issuing of Government bonds 
shall be made a felony punishable by a fine equal to the 
amount of the currency presented for redemption for such 
purpose and by imprisonment not more than ten years. It 
is even more important thus to protect the Government 
against criminal "raids" than it is to protect banks, as some 
states by law do, against artificial "runs." 

9. Council shall have exclusive control of the regulation 
of banks and may make, alter or rescind any rules and regu- 
lations for such purpose (not inconsistent with law) that it 
may deem necessary. And to aid in making such regula- 
tion more effective in the interest of depositors and the 
public, Congress shall so amend the National Bank Act 
that suitable criminal penalties will be imposed upon bank 
officials and directors who knowingly violate the law, includ- 
ing punishment of any bank official for accepting or de- 
manding any commission on loans made or securities bought 
by his bank, or practicing discrimination between customers 
in the matter of interest paid on deposits or charged for 
loans or other service rendered by the bank ; or for directly 
or indirectly charging a greater rate of interest than 6 per 
cent per annum on any kind of loan or discount ; or for mak- 



342 UNITED STATES MONEY vs- 

ing or calling any loan with the object of extortion or 
forcing the sale of pledged securities or property or the 
manipulation of the quotation prices of any security "listed" 
on any stock exchange. 

This would stop the scandal of the use of the banks and 
people's deposits for unfair stock market manipulations, and 
of ID, 50, 100 and 1,000 per cent interest on call loans paid 
to entice the money of the whole country away from legiti- 
mate business and into Wall Street gambling. National 
banks so prohibited would in their own interest force the 
passage of state laws to stop state banks and trust com- 
panies charging over 6 per cent on either time or call 
loans, or practicing discriminations between customers, or 
the other evils thus made unlawful. This is designed to es- 
tablish a general condition of obedience to law, common hon- 
esty and the "square deal" in the world of banking. 

10. This plan, or some modification thereof, is the only 
possible way to create a bigger and stronger financial power 
than that now possessed by Wall Street and no time should 
be lost, because Wall Street each day is getting stronger. 
It would break the strangle hold the "special interests" now 
have on the entire banking capital of the country and 
through the banks upon all business, and divorce the entire 
banking system, state and national, from Wall Street by 
at one stroke making the banks independent of Wall 
Street and dependent for safety and currency upon a de- 
liberate, dignified, independent, impartial, law-controlled 
public institution, operating in the open instead of in secret, 
granting as a legal right instead of a bartered favor the 
service and privileges of the council to each bank direct with- 
out discrimination or favoritism. This is the only way to 
give all the people the benefit due to increase oif general 
wealth, regulate rates of interest, the price of money and 
credit, by preserving and protecting free competition for 
loans between separated and independent banks; instead of 
destroying competition and establishing complete bank and 
money monopoly by Act of Congress as proposed by the 
"Aldrich plan." This is the only way to curb or destroy the 
excessive, growing and dangerous financial, industrial and 
political despotism of high finance, emancipate the banks and 
all business from the multiplying and intolerable evils of the 
present and reestablish industrial liberty and financial free- 
dom in the republic. A banking and monetary reform con- 
summated on these lines would be a great and lasting na- 



CORPORATE CURRENCY 343 

tional blessing second only to the Constitution of the United 
States. 

II. This council plan is in line with the rising spirit of 
the hour that seeks at all hazard to preserve popular gov- 
ernment by maintaining or increasing direct control by the 
people over their own aflfairs and welfare. The Aldrich 
plan is the direct contrary. It deprives the people and even 
their government of any effective voice, control, regulation 
or restraint over the private corporation that would monopo- 
lize their entire money supply and possess powers that can 
be used to make or break the business welfare of every 
individual and corporation and the prosperity of the na- 
tion. At the very moment when the whole power of Gov- 
ernment is being exerted to regulate and restrain lawful 
combines and destroy lawless trusts the Aldrich bill boldly 
proposes that Congress actually legalize a great money com- 
bine, a trust of the trusts. Shall the public currency for- 
ever be controlled by a council with the source of power in 
the people, or by ^ private corporation with the people and 
Government eliminated and the source of power exclu- 
sively in the beneficiary banks? Is it to be Aldrich's Na- 
tional Resent Association or the People's United States 
Monetary Council? Shall it be an unrestrained private 
central bank or a law-controlled public institution? 

The ^'Aldrich'* bill actually is pending now. Congress 
soon will decide. The people without delay should make 
their wUl known. They should require every candidate for 
president and congress to publicly pledge himself. Take no 
man high or low for granted. Both parties should take a 
position for or against. This must be made the chief issue 
of the 1^12 campaign. It is the only safe course, for the 
people. 

SHALL IT BE UNITED STATES MONEY 

OR 
PRIVATE CORPORATION CURRENCY? 



CHAPTER XXII. 
THE OCTOPUS. 

Coming Incorporated Monoy Monster. 

(See Frontispiece.) i 

The '^American Experience Table of Mortality" is about 
fifty years old. It was based on conditions that prevailed , 
a half century ago. It was devised by a big insurance 
company that arbitrarily "loaded" same for its greater safety 
and profit with figures about one-third higher than actual 
experience. The figures have not been changed. Im- 
proved sanitation and knowledge have reduced the average 
death rate. The actual combined experience table of mor- 
tality of the large life insurance companies is about one- 
third lower than the "American Table." But the Amer- 
ican Table has been permanently grafted into the statutes 
of most states and long has been used as the basis for set- 
tling estates, computing the value of dower, life estates of 
widows, children and men, and the amount of damages in 
personal injury cases. If the true expectancy of life at the 
stated age is in fact a third longer than that in the statute 
great injustice is done. 

Writer has verified the above facts with the opinion of an 
actuary of one of the largeist old-line life insurance com- 
panies. 

Insurance has become a great public necessity. Rates 
should be equitable and administration honest, impartial and 
strictly for the good of policy-holders and the public. The 
highest and most compelling motives have induced millions 
of people ;to become regulajp anitUiatLcontributor^ to these 
funds for the protection of future widows and orphans. 
Once they start they must' go on steadily or pay higher 
rates and- perhaps' through ill health 'be unable to get new 
insurance at all. 

The old-line companies now have over sixteen billion dol- 
lars of insurance in force. Their annual income has in- 
creased from $187,424,959 in 1890, $392,358,741 in 1900, 
to $703,920,542 in 1910 — a sum larger than the $701,372,374 

344 



CORPORATE CURRENCY 345 

that comprised the entire receipts of the Federal Goven> 
ment in 191 1. 

The Equitable, Mutual Life, New York Life, Prudential 
and Metropolitan, five big companies controlled by Wall 
Street, have $9,000,000,000 of insurance (60 per cent of the 
total), 6,220,036 policies in force, a combined yearly income 
of $329,176,873 and $2,236,632,312 of assets. The assets 
of these five companies exceed in value the aggregate capi- 
tal stock of the 7,331 national banks and the entire national 
debt combined. Every dollar of this immense fund has been 
paid in as premiums by the people. 

The total disbursements for all purposes made in 1910 out 
of the $703,920,542 of income was only $488,781,352, leav- 
ing $215,139,190, or nearly one-third, to compound and 
cumulate. And every year this unused fund is getting 
larger. If it continues to increase at the past ratio it will 
take less than ten years to draw into this idle insurance 
fund an amount equal to all money in circulation. 

Premiums are based on that spurious American Table. 
This collection of a third more than currently needed tends 
to pile up in Wall Street a vast and increasing portion of 
the savings and wealth of the people, except that part used 
for losses and dividends. These dangerously swollen funds 
are largely under the control of the big interests that domi- 
nate the railroads, trusts, large banks and trust companies, 
and with the aid of these deposit funds manipulate the stock 
market and its nearly thirty billions of listed securities for 
private gain to the great loss of the public that owns these 
vast insurance and bank deposits. 

The law now prohibits insurance companies investing these 
trust funds in stocks. But it is said that millions of dollars : 
instead of being invested in proper bonds and real estate 
loans are merely deposited in favored banks, thus increas- 
ing the loaning power of such banks at least 400 per cent 
more than the cash so deposited, these loans often being 
made to the trusts and big stock-market operators at nominal 
interest rates and used against the public in the frequent 
"bull" and "bear" campaigns. 

January i, 191 1, the above five companies had on deposit 
in banks and trust companies $35,243,070 in cash, which 
incrieased the loaning power of such banks more than a 
quarter of a billion dollars. 

More than any other agency, life insurance and its ex- 
cessive premiums computed by a false table have helped to 



346 UNITED STATES MONEY vs. 

make Wall Street the universal money mecca toward which 
every one of the three billion nimble dollars in the United 
States seems possessed to make its annual pilgrimage of 
devotion and tribute. 

Fire insurance companies have over a half billion of ac- 
cumulated assets and $295,644,715 annual income. Cas- 
ualty and surety companies help swell the grand total of 
yearly insurance income to more than one billion dollars. 
This exceeds the national debt. It is greater than the 
combined capital stock of the 7,331 national banks. If 
one year's insurance receipts was converted into one-dollar 
bills four, of them could be given to every man, woman and 
child in the United States and there would be enough left 
so that if sewed together end to end they would be long* 
enough to go around the world once at the equator and 
again by way of the North and South Poles. 

Other potent agencies conspire to ever increase the golden 
flood that constantly sweeps into Wall Street from every 
part of the country. 

The Bell telephone system now ruled from New York 
has a capitalization of $580,000,000 and $53,600,000 cash 
or liquid assets. It has 5,882,719 stations handling 22,284,- 
010 messages daily, with 120,311 employees. It controls 
the Western Union telegraph with 24,926 offices and $i44r 
264443 capitalization. The Postal telegraph also has large 
business and revenues. The four big express companies 
controlled by Wall Street collect more than 100 million 
dollars every year, paying 14 per cent to 54 per cent an- 
nual dividends. They keep in their treasuries more than 
$70,000,000. 

The United States Steel Corporation has $508,302,500 
common stock, $369,281,100 7 per cent preferred and $596,- 
351,867 of 5 per cent bonds, total $1,464,935467. Its net 
profits made in ten years exceed a billion dollars. It gathers 
and draws into Wall Street every year an enormous volume 
of money. It keeps on deposit in banks at least $75,000,000 
cash. The tobacco trust is said to have $20,000,000 cash 
on hand and other trusts a greater or less amount. The 
Standard Oil interests no doubt command and draw to 
Wall Street more money than any other trust because 
they are in one way or another interested in and taking 
profits from so many different kinds of enterprises. If as 
reported, <their actual net profits approximate $100,000,000 
every twelve months (as much as the average annual net 



CORPORATE CURRENCY 347 

profits of the steel trust), then each ten years this will add 
$1,000,000,000 to their liquid capital and wealth. In fact 
the compounding of interest and excessive profits from 
multiplying inviestments and huge speculations made doubly 
successful and certain because of the command of un- 
limited capital and bank credit may add a billion to their 
resources in five to eighi years, and another billion each 
succeeding like period, the time constantly shortening as 
profits and capital increase at compound ratio. If these 
interests continue their policy of buying up control of 
banks in various parts of the country and thus acquire 
complete control of the proposed National Reserve Asso- 
ciation with its limitless powers, the time surely will come 
when these interests and their allies will be able to clear a 
billion a year and possibly several times that ultimately, 
every dollar of which will be paid by the business men and 
producers of the United States. And the evidence is abun- 
dant and conclusive that the Aldrich plan was originated 
and is being promoted by the Standard Oil interests and 
their local and foreign affiliations. 

The capitalization of industrial combines grew, 1898 to 
1908, from $3,784,000,000 to $31,672,000,000. This aston- 
ishing development has its headquarters in Wall Street, to 
which a large portion of the cash revenues are sent. 

Trust growth has injected new problems into American 
life. These must be met and solved. It will require pa- 
tience, wisdom and courage to eliminate the bad and pre- 
serve the good, to exterminate the rats without burning 
the bam. There is little objection to the combinations being 
big. Big instrumentalities are required to accomplish big 
things in a big country with big resources and big-minded 
ambitious men. And these instruments must be in cor- 
porate form. No individual could supply all the capital. 
In a copartnership each partner is liable without limit for 
joint debts. In an ordinary corporation a stockholder is 
liable only for the amount he has invested. The almost 
universal incorporation of industry is due to the desire 
for permanency and to limit individual liability. 

A corporation's life, unlike the human, is not liable any 
day to end. Practically speaking a corporation is immor- 
tal, yet it has no soul. The general incorporation of all 
business tends to eliminate much of the personal or human 
element, substituting an inanimate, driving, everlasting, 
heartless machine with matter-of-fact cogs and wheels and 



348 UNITED STATES MONEY vs. 

levers, cold, metallic, selfish, sordid, and in its operations 
often criminal. 

There is but one way to put a soul into a corporation. 
If the law will impose adequate fine and imprisonment upon 
each consenting officer and director whenever their corpora- 
tion does an illegal or improper act the whole attitude of the 
corporations toward the public and their entire course of 
business will be changed and improved and more than hadf 
of all corporate evils and abuses instantly will disappear. 

It is wholly impracticable for government to fix the 
prices of numberless trust products. It would quickly lead 
io Government regulation of wages, general Government 
ownership and operation — state socisdism. Nor can trusts 
be left free to extort excessive prices from the people with 
the power of monopoly. There is a middle course, simple, 
easy, practicable and just to both the corporations and 
public. Congress has power to regulate or suppress cor- 
porations engaged in interstate commerce that become, or 
attempt to become monopolies or even partial monopolies. 
It should by law take from such corporations every special 
advantage and profit obtained through use of the power 
of monopoly. All excessive profits due to monopoly should 
be confiscated by law and returned to the people through 
the public treasury. Trusts by law must be divorced from 
each other, from railroads, banks, Wall Street and politics. 
If this is done thoroughly and honestly trusts can be made 
a blessing to the country. If this is not done trusts must 
be exterminated.- 

But the biggest trust problem and the greatest trust evil 
is the growing and dangerous monopoly of all money and 
bank credit by a few Wall Street men ; and the Aldrich till 
would increase this evil and danger a thousand fold. 

Death always has been the chief means, for redistributing 
wealth and preventing dangerous accumulations in the 
hands of individuals and families. The highest public pol- 
icy demands the dissolution and scattering of excessive 
fortunes. The English plan of the oldest son inheriting all 
is made unlawful here. It was thus hoped to prevent 
swollen fortunes. But by will and trustee methods this 
policy is being defeated. And unless great care is exercised 
the perpetual corporation will be used as the means for 
perpetuating these giant fortunes, a victory over death and 
the laws of nature, and they will go on growing in size 
and power until they rule the Government or destroy it 



CORPORATE CURRENCY 349 

altogether. Incorporated wealth is the greatest danger of 
this age. 

The railroads annually gather vast sums, much of which 
goes through Wall Street, because that is the location of 
tiie principal financial office of each system. They now 
have 239,991 miles of track, 1,699420 employees with eight 
million dependents, aggregate capital stock $8,380,819,190 
and bonds $9,600,634,906 (total $17,981454,096), and col- 
lect as gross earnings each year the enormous sum of 
$2,8o4,5&),939. If all this was sent to New York and in 
cash the railroads annually would gather up and ship to 
Wall Street every dollar of money in the United States 
outside of the Treasury, including all the actual money in 
the 24,392 banks of the country. 

Many railroads have vast accumulations of cash assets 
deposited in favored banks controlled by big financial inter- 
ests that dominate the roads. Some lines have $30,000,000 
to $60,000,000 of cash or liquid assets. Each million so 
deposited in New York banks where the legal cash reserve 
is 25 per cent, enables the bank to increase its credit loans 
$4,000,000. If the million is deposited in a country bank, 
where the reserve is 15 per cent, or in a state bank or trust 
company, and three-fifths of it then is redeposited by the 
outside bank in a Wall Street bank (all of which can be 
done in one day), that one million forms the legal cash 
basis for about ten million dollars of extra credit loans by 
the co-operating banks. 

The Stock Exchange is the chief instrument used by 
high finance for despoiling wholesale the people of the entire 
country. It hides the character of the transactions and the 
identity of the parties. It bids up the interest on call loans 
and thus sucks out of the banks of the country and into 
Wall Street untold millions seeking usury. It causes the 
public each year a direct loss of more than a billion dollars 
by methods that might fill the prisons with high financiers 
but for the fact that New York for a liberal share of the 
ill-gotten gains shields the guilty and licenses or tolerates 
these crimes against her sister states and the nation. 

Serious as are the above described conditions the prac- 
tices of the allied banks may constitute a bigger evil and 
their combined power a greater danger. This because of 
their country-wide organization, perfect machinery, polit- 
ical influence and activity, control of a large portion of the 
ready cash and monopoly of the vastly larger volumes of 



350 UNITED STATES MONEY vs. 

bank credit. All business, individual and corporate, more 
or less is dependent always or at certain periods upon 
banks. It can not prosper without bank assistance, because 
gradually business has worked away from the cash basis 
and now 95 per cent of the entire volume is carried on 
with bank credit. All American business is in the hollow 
of the bank hand, and can be aided or squeezed accord- 
ing to the will of the big interests that in recent years have 
acquired control over the banking system. 

Unless before too late business men help to check the 
growth of this dangerous incorporated bank power their 
business eventually will be swallowed up in the great money 
maelstrom or become food at some future feast of the all- 
devouring interests. And thousands who now proudly con- 
sider themselves independent bankers soon will be reduced 
in authority to mere clerks, hired servants, executing the 
orders and doing under compulsion the will of the absent 
Wall Street masters of finance to the lasting injury of local 
business, their communities, neighbors and friends. 

Will the banks prefer Wall Street for master to a law- 
regulated public institution? It must be one or the other. 
The United States Monetary Council would establish justice 
and the square deal as the rules of action in banking, 
finance and business. Each bank then would keep its re- 
serve balance with the council against which it can make 
and sell drafts for general business use instead of New 
York drafts. This will break New York's monopoly and 
put every other city on an equality with the metropolis. 
And there is nothing more important to the rest of the 
country than to stop the present rapid concentration in 
New York of power over every kind of enterprise and 
activity. As Rome was the Roman Empire, so New York 
will be the United States unless the balance of the country 
asserts its right to equal opportunity and speedily enforces 
the same with legal safeguards. A United States Mone- 
tary Council is the best instrument now available for that 
purpose. 

New York banks have little reason for keeping a deposit 
in any outside bank. But the present law respecting casli 
reserves induces country banks to keep large balances in 
New York banks. Instead of keepin|f its cash reserve of 
15 per cent of deposit liabilities all m its own vault the 
country bank is allowed to keep three-fifths thereof on 
deposit in some central reserve bank. New York pays a 



352 UNITED STATES MONEY vs. 

per cent interest for such deposits. This tends to concen- 
trate in New York a dangerous proportion of the country's 
cash capital. The Aldrich plan leaves this reserve scheme 
unchanged and most of the country's cash in Wall Street. 

National banks alone on September i, 191 1, had $744,- 
614,305 on deposit with reserve agent banks (half of the 
total cash held by all banks), $399,508,977 with national 
banks not reserve agents and $162,271,793 with state banks 
and bankers, total $1,306,395,075. The actual cash in all 
the 7,331 national banks on that date was $941,362,369. 
Their credit loans were $5,663411,073 and total resources 
$9,956,476,830. 

The 24,392 reporting banks of all kinds on June 7, 191 1, 
combined had $1,554,147,169 cash, $2,788,772,572 deposited 
by banks in other banks, $13,040,389,844 loans and $23,- 
631,083,382 of resources. These inter-deposits between 
banks often is a bond binding them together for mutual 
advantage and profit. In this way one bank may obtain 
a strong control over another. With all reserves in the 
United States Council, each bank will be independent. It no 
longer will depend for safety or profit on other banks or 
Wall Street. 

The cash or liquid assets deposited in the banks by the 
railroads, express, telegraph, telephone, industrial and in- 
surance companies that are controlled by a few men are 
believed to equal the $1,554,147,169 that comprises the 
total cash held by all the 24,392 banks. If so, then those 
men have power by withdrawing such deposits to force 
every bank to call in and cancel practically all of its loans, 
to force business men suddenly to pay up over fifteen 
billion dollars of debts to banks. That action if taken 
would plunge into bankruptcy most of the 24,392 banks 
and the borrowers of such banks and inaugurate the great- 
est panic in history. Probably it will not be done, at least 
to that extent, but the power to do it is in the hands of a 
few Wall Street men and every banker knows it and is 
afraid to antagonize the high financiers. That is the "black 
hand" threat that Wall Street ever holds over the financial 
institutions of the United States. That is the deadly power 
that would be abolished by the creation of the United States 
Monetary Council to regulate and protect the banks and 
the business of the country with an independent and ample 
supply of elastic public currency. 

The bank tax on all business computed at 5 per cent 



CORPORATE CURRENCY 353 

on $23,cxx),ocx5,ooo of bank resources exceeds a billion dol- 
lars per year, or more than the national debt. The trans- 
portation tax annually levied on business and commodities 
by railroads for service is nearly three billion dollars. The. 
insurance companies collect another billion. The trusts 
probably as much as the railroads. These four agencies, 
therefore, collect from the people each year a total sum 
larger than the value of all crops. A large portion of this 
vast business is expense that is added to the cost of food, 
clothing and other things and thus directly increases enor- 
mously the cost of living. This is in addition to the profit 
and expense added by the many middlemen between pro- 
ducer and consumer; and does not include rent, gas, fuel 
and numberless other items that enter into the cost of 
living. 

A large portion of these vast and ceaseless streams of 
money flows through many artificial channels extending all 
over the country that now converge in Wall Street, finan- 
cially draining tiie country and carrying to that one center 
an ever increasing proportion of the people's income and 
the nation's wealth. 

It was to simplify this process and make the desired 
results more certain that Wall Street invented the pending 
Aldrich plan for a vast private central bank or association 
that should legally and firmly and permanently bind the 
24,392 banks all in one vast combine for mutual profit and 
advantage as against the people. 

Is There a Money Trust? 

A trust is an artificial condition in any line of business 
that restrains trade and tends to eliminate competition and 
establish monopoly. Complete stoppage or control of trade 
is not necessary. Elimination of all competition or abso- 
lute monopoly is not essential. If the artificial conditions 
are such as to suppress competition entirely or in part and 
create complete or partial monopoly it is a trust. The con-, 
ditions not only must naturally operate to produce these 
results but they must be artificial. If the conditions are 
artificial, created, and naturally tend to produce such re- 
sults the law will assume that those creating such conditions 
intended thus to form a trust Incorporation is not an essen- 
tial in forming a trust . 

The growing, selfish and insolent Money Power, incor- 
porated and unincorporated, violates every law regulating 



3S4 UNITED STATES MONEY vs. 

and restraining its conduct, treats the people and their gov- 
ernment with contempt, and then invokes the protection of 
the laws and the courts to shield the stolen "vested rights*' 
and privileges against violence that their own lawless course 
tends to incite. 

Wall Street is a trust. It is a trust-manufacturing trust. 
Every condition there is artificial and calculated to elimi- 
nate competition and install monopoly. And it actively 
seeks to establish this trust condition among railroads, in- 
dustries and banks. The chief object is increased profits. 

There are many money trusts. In every city the banks 
are forming a local trust, usually by clearing-house rules 
or oral agreements. The object is to keep as low as pos- 
sible the interest paid for deposits and as high as possible 
the interest charged borrowers. If bank power continues 
to grow in time they will pay no interest on deposits. In 
form and effect it is an injurious conspiracy against depos- 
itors and borrowers, the customers of banks. The agree- 
ments are identical and for the same object in the banking 
business as the acts in the industrial world that are made 
criminal by the anti-trust law. And there is less reason 
or excuse for these bank trusts that control the supply of 
money and credit than for industrial trusts and they are 
far more burdensome and dangerous. The prices of ex- 
change and other bank charges often are regulated locally 
by trust agreement. The policy of charging regular cus- 
tomers exchange on out-of-town checks deposited is spread- 
ing rapidly by clearing-house agreements. A certain city 
that has about 500,000 population recently adopted the 
scheme. Next day a leading hotel was charged by its bank 
15 cents "exchange" on a $50.00 check drawn by writer on 
a Cincinnati bank. If the same rate was charged on the 
whole 160 billion dollars of checks that yearly go through 
clearing-houses the tax on business and the extra net profits 
of the banks would be increased $480,000,000, or enough 
to pay an extra annual dividend of 24 per cent on the entire 
capital stock of the 24,392 banks. Banks are now making 
excessive profits but as their wealth and power increases 
they will extort more and more from business if business 
will permit it. All such trust agreements among banks 
either should be prohibited or made general and uniform by 
law with severe punishment for discriminations. There 
should either be real and unrestricted competition for loans 
and business among banks or a uniform scale of charges 



CORPORATE CURRENCY 355 

should be fixed and enforced by law. There should be no 
money trust at all among banks or a trust strictly regulated 
by law. That is the only safety, the one protection for busi- 
ness. Were it not for these local money trusts the general 
bank discount rate would be 4 per cent or 5 per cent in- 
stead of 6 per cent, with a reasonable allowance as interest 
on deposit accounts, and ordinary depositors of cash would 
get 4 per cent or 5 per cent for the money that enables 
Sie bank to loan four to ten times as much "credit" at 6 
per cent. And if bank favoritism and discrimination was 
stopped and trusts and stock gamblers were not allowed to 
borrow at 2 per cent while others must pay 6 per cent, and 
all were treated impartially the banks could establish a 
uniform 4 per cent discount rate and make just as much 
profit. And a 4 per cent rate or even 5 per cent would 
wonderfully stimulate legitimate business and promote na- 
tional prosperity, and greatly reduce the cost of necessities 
and living. Then there is a general money trust. It is not 
incorporated — not yet. But it is real. An artificial condition 
exists in the world of big finance that tends to eliminate 
genuine competition for loans, deposits, issues of bonds and 
deals requiring financing. Insiders co-operate instead of 
compete and they have more profits to divide and outsiders 
pay more and get less because this money trust condition 
through fear and favor has merged control of money and 
bank credit largely in the hands of a few men. These men 
by direct or indirect means dominate practically all of the 
important financial institutions of the United States. The 
will of these men is a most complete, definite, powerful and 
dangerous money trust. Its intangible and invisible form 
increases its irresponsibility, rapacity, craft and daring. A 
hidden power is the most dangerous and the most difficult to 
locate, regulate or restrain. 

While a powerful and supreme money trust exists and 
dominates in the larger sense all American finance and 
business and everybody knows of this fact, it will be diffi- 
cult if not impossible to reach and properly control it by 
direct regulating statutes. But its power for evil can be 
greatly diminished by indirect agencies. Laws with suit- 
able penalties stopping all bank discriminations, usurious 
interest rates, margin gambling, regulating the stock ex- 
changes, divorcing the trusts, banks, railroads and insurance 
companies from each other and regulating the use of their 
cash funds, taking the bank reserves out of Wall Street 



356 UNITED STATES MONEY vs. 

and mobilizing them in one central reservoir under Govern- 
ment regulation, and creation of the United States Monetary 
Q>uncil as a greater financial power than Wall Street, 
made independent and impartial by law, able and ever 
ready to aid and protect the 24,392 banks of the country 
and the business customers of such banks with an ample 
supply of sound elastic currency and credit will stop most of 
the glaring evils and abuses and bring Wall Street and its 
lawless element ultimately under the cflFective control of 
the Federal Government. And there is no other way to 
get adequate relief from present intolerable conditions. The 
pending Aldrich plan is a long step in the opposite direc- 
tion. Instead of curtailing it would multiply the already 
over-swollen power of those few Wall Street men. Their 
money trust then would be complete, incorporated, a leg^al 
body entitled to claim the protection of the laws and the 
courts. Acts now evil if not criminal would be made law- 
ful and the National Reserve Association as a vast private 
money trust would become the ruling power in finance and 
business. Shall the present outlaw money trust that now 
must hide in the shadows and operate in the darkness, the 
bandit of the financial highway, be called and crowned by 
Act of Congress as the supreme sovereign of finance and 
business, a lawful money trust, the incorporated master of 
24,392 banks and of all industries, commerce and politics ? 

The National Reserve Association will have power of life 
and death over the business of every man, the aflfairs of 
every corporation, the welfare of every community and the 
prosperity of the nation. It will be judge, jury and execu- 
tioner. By inflating and contracting its corporate cur- 
rency and raising and lowering its discount rate it can 
raise and lower at will the prices of all securities, property 
and human labor. By co-operating with the private central 
banks abroad it will help establish a universal money trust 
that will eliminate all competition between banks and bank- 
ers for bonds and loans .and this world-wide money 
monopoly will double the mortgage on all mankind by in- 
creasing interest rates everywhere. 

To it Congress is asked to hand over as a free gift a 
billion dollars of public currency, money, the property and 
medium of exchange of 94,000,000 people, to be forever 
retained and loaned out to the people for its profit. It may 
have power to run the nation into debt or liability for 
billions of dollars as guarantor on the emissions of its 



CORPORATE CURRENCY 357 

printing press, on corporate currency issued without limit 
or effective restraint. By act of Congress the public rev- 
enues of the republic for a half century are to be mortgaged 
to this money trust, forty billions collected by taxation to 
be turned over for deposit and use by this private corpora- 
tion without one cent of compensation. 

By resolution adopted by vote of the five men who com- 
prise the majority of its executive ccwnmittee, it can, in 
secret and without notice, contract and cancel a million, a 
hundred million, or five hundred million of its corporate 
currency and at one breath thus annihilate billions of bank 
credit built as a tenfold^ inverted pyramid on such cur- 
rency, forcing every bank to call in its loans and every 
business borrower to pay his Bank obligations at whatever 
sacrifice. It will hav€ power to abolish prosperity and in- 
flict panic, plunging the entire nation into the horrors of a 
financial catastrophe that would paralyze industry and com- 
merce, close the factories and turn millions of workmen out 
to tramp the streets without means to provide food and 
shelter for their helpless wives and children. 

To five men, perhaps mere dummies, irresponsible, paid 
employees of an unregulated, uncontrolled and unrestrained 
private corporation. Congress is asked to absolutely and un- 
reservedly commit for fifty years the vital destinies of the 
republic and the interests and welfare of its 94,000,000 in- 
habitants. The National Reserve Association, a great pri- 
vate central bank owned by the banks controlled by Wall 
Street, is to be invested with supreme governmental powers 
and incorporated as a great dominating money trust by law, 
^independent of government and above all public authority. 

That is the omnipotent and deadly octopus Cons^ress is 
urged to legally set loose and install as the master of Amer- 
ican banks, business, finance, industry, commerce and poli- 
tics. Its poisonous and itching tentacles will gradually reach 
out and bind themselves about every home, farm, industry, 
bank, the public treasury, courts. Congress and the White 
House, gathering to itself supreme political power, sucking 
the wealth and substance of the people into Wall Street and 
dumping it into the Stock Exchange or the eager laps of the 
handful of men who will seek by moral if not by legal 
treason to rob the people of their God-given liberty, destroy 
the republic as a living reality and in its place erect an empire 
disguised as a democracy with incorporated wealth crowned 
as the ruling sovereign and all the people its subiects. 



APPENDIX. 
A CENTRAL BANK TRUST. 

PlPMidmit of the United States Gets AnalytU of ''Aldrieh Plan" 

Made by Author — Poaition of Proaideat Taft — Letten 

and Inaide Facta Made Public 

On November i6, 191 1, the author of this volume met 
President William H. Taft in the White House at Wash- 
ington to discuss certain proposed changes in the monetary 
and banking laws and particularly the so-called '^Aldrich 
Plan" for a private central bank urged by the National 
Monetary Commission. 

A written statement or analysis of that "Plan" then was 
given to the President, its receipt being formally acknowl- 
edged by his secretary in the following letter : 

THE WHITE HOUSE 

WASHINOTON 

November 1%^ 1911 



Uy dear Sir: 

I have brouigiit to tiie President's aiten* 
tion ^our letter of the 10th Instant , which you 
left with zne yesterday. 

Sincerely yours , ^ 



%^ 



Secretary to the President 



kn AlAred 0, Crosier « 

Grand Rapids, Uichi£an« 

358 



CORPORATE CURRENCY 359 

In the interest of a more general understanding among 
the people of the important questions involved in the sug- 
gested revolutionary changes in our currency and banking 
systems, and in view of recent events, it seems advisable 
and proper here to make such statement public. It is as 
follows : 

"Grand Rapids, Mich., Nov. 10, 1911- 

Hon. William H. Taft, 

President of the United States, 
Washington, D. C. 

Dear Sir: Your secretary, Mr. Hilles, at Milwaukee 
sugjg^ested that I see you in Washington to personally dis- 
cuss with you the proposed changes in the monetary and 
banking systems and that I write out and send to you my 
views on the subject. Therefore, without assuming any 
want of knowledge about these matters on your part, as a 
citizen and republican I respectfully venture these few 
observations. 

You of course know that the gold standard is firmly and 
permanently established and is not an issue in the present 
monetary campaign. This simplifies the situation. 

Shall control of the public currency be public or pri- 
vate? That is the real question and about the only one 
in serious dispute. On this vital issue in the immediate 
future the greatest monetary struggle in the nation's his- 
tory, is likely to take place. It may largely overshadow all 
other political problems; and the successful party of the 
future I believe will be llie one that takes the people's side 
in this contest. 

Former Correspondence. 

You may recall my letter of August 20, 1909, to you at 
Beverly just before former Senator Aldrich called upon 
you there. 

I then told you that I had information that the National 
Monetary Commission would report in favor of a central 
bank to issue, inflate and contract the public currency, the 
institution to be a private corporation owned by the banks, 
which meant ultimate control by Wall Street. 

About ten days later, in a public address at Boston, a 
few days after your conference with President Aldrich 



36o UNITED STATES MONEY vs. 

of the commission, you said that the trend of the minds of 
a majority of the monetary commission was in favor of 
a central bank of issue, but that if such institution is created 
it must not be controlled by Wall Street or by politics. This 
public wamvig was timely, to the point and named the 
greatest dangers to be avoided. 

It is my view that any private corporation controllmg 
the currency supply of the entire country inevitably would 
in time be controlled by Wall Street and that it will use 
the imperial powers of the institution over all banks and 
through the banks over the business of every man and cor- 
poration to dominate in its own interest the politics of the 
states and nation. That if such an institution be needed 
and is created it should be a public institution under abso- 
lute public control instead of a private corporation. I 
am opposed to Congress taking from the Government a 
billion dollars of public currency used by the people as 
their chief money supply and handing it over as a free 
gift to an irresponsible private syndicate to be forever 
retained and loaned out for the exclusive profit of such 
syndicate. 

The Aldrich Plan. 

The revised "Aldrich Plan" put forward by the National 
Monetary Commission asks Congress to create a great cen- 
tral bank to be named National Reserve Association. It is 
to be a private corporation. The $300,000,000 stock is all 
to be owned by the banks in proportion to the size of their 
capital stock. For example, the National City Bank of 
New York, having $25,000,000 capital, will own a thousand 
times as much National Reserve Association stock as a 
country bank with $25,000 capital. Three large Wall Street 
banks together will own nearly as much central bank stock 
as half of all the national banks of the United, States, 
taking the smaller banks. If all the stock is subscribed and 
only half payment is required the 4 per cent stock will net 
the banks 8 per cent. The big banks of course will own 
the central bank and Wall Street will control the big 
banks. 

Already the larger banks are organizing side-partner se- 
curity companies — a sort of financial "Dr. Jekyll and Mr. 
Hyde" — to acquire banks throughout the country to control 
the central bank. The National City Company is the Sia- 
mese twin of the largest Wall Street bank. It is reported 



CORPORATE CURRENCY 361 

to have already acquir^ed more than a hundred large banks 
in Washington, Chicago and elsewhere. But it was too 
hasty or too public about it. Publicity of this illegal 
scheme endangers the Aldrich Plan in Congress. So we 
are told that at least for a time the National City Company 
is to put all of these bank stocks out of its hands. Pre- 
sumably the certificates will go into friendly hands or 
remain under its control. Then, ostrich-like, it will be com- 
pletely hidden from the people because its head is buried in 
the sand. 

The elaborate and complicated system of branch boards 
and local associations does not fully disguise or change the 
potent fact that the National Reserve Association will be a 
private corporation owned and absolutely controlled by the 
special interests. 

The banking fraternity is to select forty-two of the forty- 
six directors of the National Reserve Association. The 
other four are public officials representing the interests of 
90,000,000 people whose entire public currency supply is to 
be handed over by Congress to be forever kept and manipu- 
lated by this private corporation.- As four is not a majority 
of forty-six, the share of control allotted to the public would 
be a huge joke if not so dangerous. The ratio of forty-two 
to four in favor of the banks doubtless correctly represents 
the division of benefits between the special interests and the 
people. The general plan in most features is all right. But 
the scheme of private instead of public control reveals the 
climax of the greed and audacity of high finance. 

It is conceded that the scheme originated in Wall Street 
and I think you will take judicial notice that "high finance" 
never supports a financial measure unless its interests and 
power will be advanced by its adoption. 

Private Monopoly of the Public Currency. 

The chief aim of the "interests" is to obtain through a 
coi-poration owned by them a private monopoly of the public 
currency. In my letter of August 20, 1909, I fully ex- 
plained how at the New York meeting of the National Civic 
Federation, December 17, 1907, the distinguished Wall 
Street bankers present publicly refused to accept my amend- 
ment to their currency reform resolution, viz. : 

"Provided that control of the volume of the public cur- 
rency shall not be taken away from the Federal Govern- 
ment and put into private hands." 



362 UNITED STATES MONEY vs. 

In that letter also I recalled the fact that in his emergency 
currency bill Senator Aldrich attempted to eliminate from 
the present law the prohibition against contracting the na- 
tional bank currency more than ^,000,000 per month, and 
that he consented to strike out of his bill this dangerous 
provision allowing unlimited and sudden contraction of the 
entire public currency only when attention was called to the 
matter by the public reading of my petition in the Senate 
the next day after his speech for his bill. Thus every cur- 
rency move emanating from Wall Street seems to be an 
effort to induce Congress to give private interests unlimited 
power suddenly to contract the currency supply — ^to make 
money scarce without warning. 

The private syndicate, under the Aldrich plan^ without 
any substantial consideration to the Government is to get 
nearly a billion dollars of currency used as money for about 
the cost of printing. This money never will be returned to 
the Government. Millions will be destroyed or burned by 
accident. The benefit goes to the syndicate, not» as now, to 
the people. This syndicate of bankers for its own profit is 
to loan this vast public currency to their own banks. If the 
banks are to use it as a reserve basis it will enable them to 
loan to the p^ple for interest profits more than ten billion 
dollars of bank credit in the shape of ordinary bank loans. 

For thus empowering the syndicate and its banks with 
relatively little extra investment to collect from the people 
continuously interest on about ten billion dollars of extra 
loans the Aldrich plan demands that the s}mdicate pay the 
Government ij4 per cent per anntun on all currency issued 
in excess of $900,000,000, and 5 per cent on all in excess of 
$1,200,000,000, but nothing on the first $900,000,000! Even 
this apparent generosity (?) vanishes in the light of the fact 
that it is not expected this currency ever will exceed 

$000,000,000. 

Many believe that this currency will not pass at par unless 
backed by the faith and credit of the Government and that 
this should be pledged. If the Government is to be re- 
sponsible for the currency and a private syndicate is to issue 
and own it and get the profits from its use, would not the 
Government in effect be in position similar to a man loaning 
his promissory note for a billion dollars to another party 
who gets the note cashed and forever keeps and uses the 
entire proceeds? 



CORPORATE CURRENCY 363 

Dangerous Currency Contraction. 

Banks, as you know, loan credit, not money. This is the 
right to draw checks to the total of the note discounted. 
Borrower gets a bank-book showing his "credit." This 
makes him a "depositor," although he has put in no actual 
money. By thus mcreasing its loans of "credit" a bank cor- 
respondingly can increase its deposits without getting an 
extra dollar, almost indefinitely. About the only legal limi- 
tation is that it must have in cash in its vault an amount 
equal to a certain per cent of its deposit liabilities varying 
from 25 per cent down to 7J4 per cent according to the 
location of the bank. The official reports show that the 
banks as a whole loan eight to twelve times as much "credit" 
as they have in cash. 

I have not at hand more recent reports but the report of 
the U. S. Comptroller of the Currency for 1907 shows that 
the collective individual deposits (not including deposits by 
banks) of all the 19,746 reporting national and state banks 
and trust companies amounted to $13,099,600,000, while 
their aggregate cash reserves amounted to $1,113,742,316, or 
8.5 per cent of their aggregate deposit liabilities due to indi- 
viduals. 

When the banks are fully loaned up, if by withdrawals or 
otherwise their cash reserves are decreased half, under the 
law they must decrease their total loans one-half. They 
must force their customers suddenly to pay up loans aggre- 
gating eight to twelve times the shrinkage of cash reserves. 
If a half billion thus is withdrawn from bank reserves busi- 
ness borrowers must pay up at once over five billion dollars 
of loans due to the banks (an amount more than twice the 
total of all the money in circulation in the United States), 
no matter what sacrifices of securities, properties and com- 
modities it entails. The banks cannot do other than force 
such payments even if it closes industries, plunges labor into 
idleness, causes general distress, panic and financial rtin. 

A private corporation with power suddenly to contract 
the outstanding public currency without limit, of course 
thereby could almost to any extent deplete the reserves of 
the banks and force them immediately to call in their loans in 
such volumes that general panic and financial disaster would 
be inevitable. Likewise by inflating the currency it could 
increase bank reserves and enormously and even danger- 
ously expand the loaning power and profits of the banks. 



364 UNITED STATES MONEY vs. 

In order that this vital and all controlling power over the 
bai^s and all business, the power to inflate and contract the 
public currency, might not be feared by the people as for- 
midable, not to say dangerous, jt has been given an enticing 
name, "elasticity." No doubt elasticity of the currency and 
of the loaning power of the banks is desirable. But it may 
make a great difference to the people and their interests who 
does the stretching, and for what purpose it is done. 

Is it wise or patriotic for Congress unnecessarily to grant 
an obviously dangerous power to uncontrolled powerful pri- 
vate interests, leaving the people for protection only the 
mere hope that such interests will not use the power against 
iJie general welfare and for their own private profit? 

Artificial Panics. 

It is the belief of many that some panics or quasi-panics 
have been more or less deliberately caused for improper pur- 
poses and that most panics are due chiefly to artificial and 
removable causes. 

Every panic in history seems to have started in Wall 
Street. To stop panics should we not go there and remedy 
the evils that tend to create panics, such as margin gam- 
bling, usurious interest rates and illegal bank practices, 
instead of merely legislating to safeguard the banks against 
the results of panics? You may know of the fact that 75 
per cent of all transactions on the stock exchange are fic- 
titious, illegal, gambling and "wash sales," and that 80 per 
cent of the money and credit to conduct such deals is sup- 
plied by the banks that hold the deposit savings of the 
people. 

Congress will have to act to protect the country against 
these harmful things because the great state of New York 
for about four million dollars annually in stock transfer 
fees has sold to the gamblers the privilege of wrongfully 
despoiling on its soil the people of that state and of the 
United States. 

Long before the panic of 1907 in writing and orally I 
expressed the belief that a panic might be caused to pinch 
the country into crying for monetary reform and accelerate 
in Congress the prearranged program of Wall Street. The 
panic and the "object lesson" came just before the Congress 
convened in which was first introduced the legislative 
measures prepared and publicly advocated by Wall Street 



CORPORATE CURRENCY 365 

bankers and the New York Chamber of Commerce months 
before the panic, including in substance the identical pri- 
vately owned central bank scheme now known as the revised 
Aldrich plan — ^the National Reserve Association. 

At said National Civic Federation meeting in December, 
1907, when a majority present were Wall Street business 
men or their friends, I publicly expressed my belief that the 
panic of 1907 was artificial, no one present disputed the 
charge. 

The facts about serious Wall Street moves seldom become 
public. But it was reported that at the recent Congressional 
investigation of the Steel Trust one of the most prominent 
financial men of Wall Street, Oakleigh Thorne, president 
of the Trust Company of America, on oath astonished the 
country by declaring in substance or effect that the panic 
of 1907 was artificial, was deliberately caused, and named 
the high Wall Street interests he is said to have sworn 
started the run on the banks that precipitated the financial 
crisis. And now the Government in its suit against the 
steel trust gravely charges some of these same people with 
illegal acts or criminal conspiracy and with using the 
financial institutions and capital of the country for unlawful 
purposes. 

And these are the same interests that largely will control 
the National Reserve Association and its autocratic and 
dangerous powers, thereby creating a financial monopoly — 
a trust of the trusts — ^under express authority of Congress 
at the very time when the Government and the courts are 
trying to destroy monopoly by breaking up the trusts. A 
monopoly of banking and currency will give them ultimately 
a complete monopoly over about everything worth control- 
ling in the United States, including Government itself. 

At a recent meeting of the New York Bankers' Associa- 
tion, in a public address one of the most prominent Wall 
Street bankers virtually threatened the country with another 
panic unless Congress yielded to the demand of Wall Street 
and adopted the Aldrich central bank scheme. 

After the Aldrich- Vreeland emergency currency bill had 
passed the Senate in 1908 I was present at a public hearing 
before the House Banking and Currency Committee. More 
than a dozen bankers, members of the Currency Commission 
of the National Bankers' Association, were present and 
spoke against the measure, as did many representatives of 



366 UNITED STATES MONEY vs. 

the larger commercial organizations of the country. Reply- 
ing to direct questions by members of the committee every 
banker solemnly declared that if the bill passed it would 
cause another panic, and several said the panic would arrive 
in less than three months. The bill passed but no panic has 
occurred and more than three years has elapsed. Either 
those distinguished bankers were poor prophets or the 
change made in the bill striking out the Senate amendments 
that prohibited persons being both directors of a bank and 
of a corporation borrowing from that bank and lowering 
the Government tax on the emergency currency so as to 
make it profitable for the banks to handle it warded off the 
predicted panic and saved the country. 

To cause a panic or even to threaten the country with 
one to frighten or force the people and Congress into pass- 
ii^ laws that otherwise would be defeated is a species of 
duress utterly indefensible and dangerous. It is worse than 
the rule of the mob. For the public prediction of panic 
tends to cause panic, and the financial and fatal conse- 
quences of panic often are pathetic. 

It is not my desire to stir up class feeling or arraign 
bankers as a whole. Most bankers are honest, patriotic and 
useful citizens. But the above incident was a public pro- 
ceeding and the printed records show the facts as stated. 

This would seem to be a good time and opportunity to 
resist the unjust and selfish legislative demands of the 
"interests" and thus for all time settle the question as to 
which is supreme and the most powerful, Wall Street or 
the Government and people of the United States. 

Control Currency to Manipulate Prices. 

The Aldrich plan grants to such private corporation 
direct control over interest rates by the unregulated, unre- 
stricted and unlimited power to increase and decrease the 
discount rate. If it should increase the discount rate to the 
banks of course the banks would do the same or more to 
their customers. Otherwise those in control of the central 
bank by increasing the discount rate could instantly deprive 
every bank and trust company in the United States of a 
substantial portion of their entire profits. 

Would not every banking institution in the country in 
sheer self-defense find itself obliged to obey the financial 
and political orders of those who may have seized control 



CORPORATE CURRENCY 367 

of the National Reserve Association? Would not this create 
a vast and dangerous political machine that inevitably would 
result either in its controlling the Federal Government or 
itself being abolished for political action like the old United 
States Bank of Andrew Jackson's time in the midst of 
universal panic and financial chaos? 

The central bank simply by inflating and contracting the 
public currency or by raising or lowering the discount rates 
could automatically and immediately raise and lower the 
prices of all securities, property and labor. 

Prices of the twenty-five billion dollars of listed securities 
at times fluctuate at least 20 to 50 per cent. This is partly 
due to natural causes but more often it is due to unfair 
manipulation by secret pools that cause interest rates to be 
run up on the Stock Exchange to ruinous figures and bank 
loans to be called in large volumes to aid inside operators in 
their speculations against the public. And yet a drop of but 
10 per cent in the average price quotations indicates a direct 
and immediate loss to the holders of securities of a sum 
equal to all the money in circulation in the United States. 

Bidding up the rate on call loans is the effective magnet 
used to entice away from local business the money of the 
people deposited in banks that it may be used in "high 
finance" flotations and to promote gambling speculation in 
Wall Street. 

Bank Discriminations. 

A related evil, that should be made impossible by law 
while Congress is reforming the banking system, is the 
practice of many large banks of discriminating in the matter 
of loans and interest rates in favor of trusts, insiders and 
stock speculators. 

Why should trusts and Wall Street operators usually b^ 
able to borrow from the banks practically in unlimited quan- 
tities at 2 per cent while responsible business and commer- 
cial customers often cannot borrow enough properly to 
conduct legitimate business and always must pay two to 
three hundred per cent more as interest than is paid by 
stock gamblers? 

As the banking system is a quasi-public institution clothed 
with a public interest by law, enjoying special privileges and 
immunities, it should exercise its duties to th^ public im- 
partially, without discrimination, and not in any way be an 



368 UNITED STATES MONEY vs. 

instrument used to oppress individuals, corporations or 
communities or to promote unlawful monopolies and unnat- 
ural and improper concentration of wealth in the few to the 
disadvantage of the many. 

International Money Monopoly. 

You of course realize that whoever controls the monetary 
circulation to a large extent will control the credit, interest 
rates, prices and the business activities of the world. 

A central bank issuing the public currency if a private 
corporation naturally will co-operate with the great pri- 
vately owned Government banks abroad and comprise in 
effect an international monetary trust with a world-wide 
monopoly of money. The result if not the design will be 
permanently to eliminate all competition for large loans. 
This will make it easy to double the mortgage on mankind 
without a dollar of extra benefit simply by increasing the 
rate of interest on the nearly thirty billions of the bonds of 
governments and the vast quantities of state, municipal and 
corporation bonds as they mature and from time to time are 
refunded. 

The revised Aldrich plan proposes immediately to increase 
the rate of interest and so refund the national deot of the 
United States, amounting to nearly a billion dollars, that it 
will not be paid off for half a century. It would unneces- 
sarily mortgage the next generation before it is bom. Surely 
this is not the desire of the people and I do not believe their 
Congress will do it. 

In a broad sense there is always a struggle on by the 
great individual and corporate owners of the vast fixed 
income or bond wealth of the world to decrease the relative 
value of property and labor as measured in money by 
increasing the rate of interest on bonds. Thus they hope to 
recover what they lost when Providence unexpectedly 
swelled the output of gold until gold and gold bonds now 
will purchase much less labor or property. By bringing the 
large competitors for such bonds into co-operation either 
interest rates can be increased or the bonds be bought below 
par because there will be no other available market for the 
bonds. 

The Aldrich plan will help create an international financial 
world power above and beyond the reach of all law that 
through the power of the purse will be able to rule govern- 



CORPORATE CURRENCY 369 

ments and kingdoms, cause peace and war, extort from the 
peoples of the world an ever increasing interest toll and 
tend to develop a civilization where the dollar with its 
metallic heart will be of more importance than man with his 
immortal soul. 

And the more war there is the greater the demand for 
money for armies and battleships and the higher the interest 
rates can be raised by the icoming great international mone- 
tary combine. 

An Alternative Plan. 

At the New York meeting of the Academy of Political 
Science in December, 1910, President Aldrich and other 
members of the Monetary Commission being present, I 
suggested tentatively an alternative plan. 

We had listened to the clever and astute arguments for 
the "Aldrich plan" by the distinguished Wall Street bankers 
present. One of them is a partner in a great international 
banking house said to represent in America the Rothschilds 
of Europe. He declared gravely that if dividends on the 
central bank stock are limited by law to 4 per cent there 
would be no danger of control of the institution falling into 
the hands of the special interests because there would not 
be enough temptation to make them want control. Reply- 
ing, I cited the purchase of a few thousands of Equitable 
Life Insurance stock for $2,500,000 made by a well known 
Wall Street banker when the law limits dividends on the 
stock to 7 per cent annually and said that it was power the 
banker sought and that it is power the "interests" seek 
through a central bank under their control. I then told 
them that I did not believe they ever could persuade Con- 
gress to take away from the Government and grant to a 
private corporation an exclusive monopoly of the entire 
public currency. 

The great issue now raised is whether control of the 
public currency shall be public or private. It always has 
been public and the Constitution so intended. The burden 
of proof is on those urging the radical change. 

Suppose we grant the need of currency and banking 
reforms, consolidation of bank reserves, elasticity, a central 
baiik or agency to issue the currency and even rediscount 
for the banks ; in fact to do all of tiie things proposed by 
the Aldrich plan. 



370 UNITED STATES MONEY vs. 

And as recent concentration of banking capital and power 
in the hands of the same few who dominate the trusts, rail- 
roads and other large activities seem to have made it now 
impossible to finance or conduct any important undertaking 
without their consent perhaps it is necessary to create a 
central institution with financial power greater than Wall 
Street to emancipate the banks and the business of the 
country from this tightening and dangerous grip. 

But no convincing reason has been advanced why the 
National Reserve Association should be a private corpora- 
tion instead of a public institution under public control. 

Why should Congress make the dangerous experiment 
when the historical public control will be better and more 
safe? Ample safeguards easily can be provided that will 
keep all partisanship and politics out of the institution. 

There are several ways to provide public control. One 
way, the plan I suggested at said Academy meeting, is to 
have the President appoint a board say of one hundred 
non-salaried governors, one on the nomination of the gpv- 
emor of each state. This body to select an executive com- 
mittee of well paid, highly trained financial experts, sworn 
as public servants and divorced from all other business, to 
run the institution. This plan, or some modification of it, 
would insure representation and fair treatment to every 
state, guard against partisanship, and inspire the confidence 
of the people, which is necessary to insure the usefulness and 
permanency of any such institution. 

It will be far safer for banks to be able to obtain adequate 
assistance direct from a public institution as a defined legal 
right, instead of begging a favor from a private corporation 
and perhaps on the side being forced to submit to some 
unprofitable secret agreement with the interests in control 
of the corporation by way of flotations or the purchase of 
securities. 

The banks constantly will be in grave peril if the Aid rich 
plan is adopted. They will be the storm-center of such 
bitter partisan strife, crimination and suspicion that de- 
positors may take alarm, withdraw and hoard money, inflict- 
ing upon the banks and the country in even more aggravated 
form the very evils and dangers sought to be avoided by 
monetary reform. 

Public investigations of banks and bank practices will be 
frequent, demanded and conducted for partisan purposes. 
If my definite information is correct, and I believe it is, 



CORPORATE CURRENCY 371 

that the official reports on file with the United States Comp- 
troller of the Currency show, on sworn admissions, that 
nearly 40 per cent of all national banks knowii^ly violate 
the law, you can see the harm to the banks and the handle 
that would be made politically if these reports were made 
public and exploited in a partisan congressional investigation 
of the banking system. 

The exigencies of political strife might emblazon the fact 
that right now there are more than sixty convicts who for- 
merly were bankers, in just one of the many prisons, and 
wholly unwarranted inferences might be drawn, casting 
unjustifiable suspicion upon all bankers when as we know 
the great majority are law-abiding, upright, and useful citi- 
zens. This may excite public fear, induce runs on banks, 
do permanent harm to the influence of bankers generally 
and endanger the solvency of their institutions. 

The Aldrich plan if adopted I believe will stir up class 
distinction and hatred more than any legislation ever pro- 
posed in the country's history. What folly to take these 
risks when it is not necessary. 

If the banks reach for more profit and power they may 
have many of the special privileges and immunities they now 
enjoy taken away. At best the interest and power of any 
coutitry bank in the central bank will be insignificant and 
useless. 

Bankers should remember that in Andrew Jackson's time 
when banks became the issue in politics they suffered fright- 
fully along with the entire country in the resulting panic 
As the nation and its activities now are more extensive the 
calamity may be far greater. 

An attempt is being made to persuade or drive all bankers 
into a suicidal support of the Aldrich scheme. But I know 
that there are very many patriotic bankers who realize the 
danger and will vigorously oppose the plan. Some will not 
because afraid of reprisals by Wall Street. 

I do not believe Congress will farm out the public cur- 
rency to be forever exploited^ for the profit of a private 
syndicate. If Congress insists that control of the National 
Reserve Association be public instead of private and those 
promoting it oppose and block all monetary reform because 
their personal interests are not served the responsibility for 
any resulting future panics will be upon them. 

You will understand that we do not oppose the legitimate 



372 UNITED STATES MONEY vs. 

business of Wall Street but insist that its lawless and unjust 
acts must cease. 

The practice of the "interests" in hailing as a statesman 
the man who furthers their designs and crying "demagogue" 
when anyone objects to their unfair use of the powers and 
laws of Government against the general welfare has lost its 
effect because the people are more thoughtful, observant and 
alert in their own interest. 

You of course realize that no monetary or banking reform 
is possible as a permanent solution of current defects unless 
it accords with the discriminating judgment of a majority 
of the voters of the United States. 

Your commanding position, power to recommend to 
Congress and to veto its acts, makes it possible for you to 
protect the country by defeating this attempt to obtain pri- 
vate control of the public currency. For this reason my 
appeal is addressed to you with full confidence. And in this 
I know I voice the earnest views of very many citizens. 

Mr. President, still I am an optimist. Most people arc 
good. But in the Steel Trust suit the Government seems to 
think some are not so good. It is no want of faith in 
humanity when we object to Congress taking an obviously 
dangerous power from the Government and the entire people 
and unreservedly putting it into the irresponsible hands of 
the selfish few. 

Very respectfully yours, 

(Signed) Alfred O. Crozier. 

President Taft's Position, 

Writer is a riepublican. But Lincoln, not Aldrich, is his 
ideal. He has admired the judicial temperament and genial 
personality of President Taft, and approved many of his 
important official acts during his long public career. He 
had hoped the President would take such a stand for the 
people and against the special interests that his reelection 
would be advisable, imperative. 

Believing that the crucial test of the President's courage 
and independence would come when the Monetary Com- 
mission reported to Congress the predetermined plan for the 
creation of a huge money trust to privately control the 
public currency and rule the banks and through them the 
business of the entire country, author in all fairness 
and in writing frequently made the President aware of 
the true situation so that there would be no chance of his 



374 UNITED STATES MONEY vs. 

being taken by surprise or misled. The foregoing, one of 
many during the past three years, illustrates. 

Writer's letter of August 20, 1909, to the President was 
received and read just before Senator Aldrich arrived at 
Beverly to confer about the Monetary Commission's work 
and, if reports then current were correct, to urge a special 
session of Congress to hastily put through the central bank 
scheme in November, 1909. If that course was contem- 
plated it was abandoned as unwise. About three weeks 
after his conference with Aldrich at Beverly the first public 
intimation was given that the Monetary Commission was 
even considering a central bank plan. This was made by 
President Taft in his Boston speech on September 14, 1909, 
the first of his 13,000-mile western trip. In that speech he 
said: 

"It is apparent from the statements of Mr. Vreeland and 
Mr. Aldrich that the trend of minds of the Monetary Com- 
mission is toward some sort of arrangement for a central 
bank of issue which shall control the reserve and exercise 
a power to meet and control the casual stringency which 
from time to time will come in the circulating meditun of 
the country and the world. 

Mr. Aldrich states that there are two indispensable re- 
quirements in arty plan to be adopted involving a central 
bank of issue. The one is that the control of the money 
system shall be kept free from Wall Street influences and 
the other that it shall not be manipulated for poUtical pur- 
poses. These are two principles to which we can all 
subscribe." 

This public declaration was what writer hoped to call out 
from Mr. Aldrich or the President by the letter of August 
20, 1909, so the country might know what was coming. 
Nearly a year earlier writer had caused one of the leading 
press correspondents of New York to personally interview 
Frank A. Vanderlip, then vice-president and now president 
of that great Standard Oil institution, the National City 
Bank. Mr. Vanderlip then was reported as saying (in 
1908) that the Monetary Commission would report in favor 
of a central bank to issue and control the currency. Be- 
cause that bank had led in the fight for a central bank and 
to create the Monetary Commission, and on account of 
Senator Aldrich being the father-in-law of John D. Rocke- 
feller, Jr., this early information was considered reliable, 
as now it proves to have been. That letter was as follows : 



CORPORATE CURRENCY 375 



THE wmre mouse 

WASHINOTOM 



Au0i .at 23» 1909. 



iMr iBtter of JUiguat 1K)th In regard to tintaf* 
ciii iogidlation lias teeir received endi «U1 be broun^t 
to the^citiontion of Uio freaiddnt. 

fiiy trui^ yoara» 




Secretary to the Preaidant* 



ttr* filfred 0» Croaier^ 
^ilnin^oR* Delft»ar0«' 

"Wilmington, Del., August ao, 1909. 

Hon. William H. Taft, 

Beverly, Mass. 

Dear Sir : I most earnestly hope that no special session 
of Congress will be called prior to December to attempt 
currency legislation. There would not be sufficient time 
for the people and press to study and discuss so important 
and difficult a subject. 

There may be those who urge a special session as a means 
of passing measures that could not be put through if the 
country was given time to learn the true character and 
effect of such a law. But I am sure you would not know- 
ingly countenance sudi a course. You have in a short 



376 UNITED STATES MONEY vs. 

time won the confidence of the masses and they trust your 
judgment and vigilance to guard their welfare and prevent 
hasty and ill-considered laws. It would seem that your 
responsibility in this regard is particularly heavy because 
the average man does not realize how his business and 
general welfare may be jeopardized by unwise banking and 
currency laws. 

I had hoped it might be convenient to discuss this subject 
with you personally before it came to an issue but the pub- 
lished report of the talk of an extra session impels me to 
write you. 

Now Mr. President, I think there is ample evidence to 
establish beyond reasonable doubt that there is on foot a 
determined movement, well concealed from the people, to 
take from the people's government and put into private 
hands all control over the volume of the public currency. 
This of course would mean direct or indirect control by 
Wall Street of the people's entire money supply. Those 
exercising this power to inflate and contract at will the 
volume of the circulating medium could thereby easily and 
to a large extent increase and decrease the prices of securi- 
ties, property and labor. Are we ready to take a step so 
full of possible peril to the public welfare? Should it even 
be considered at a special session that can at most last 
only a few weeks? The power to contract suddenly and 
arbitrarily the volume of currency available for business 
necessarily carries with it power to increase interest rates, 
to wreck credit, derange business, endanger the solvency of 
banks and the security of depositors and even to cause 
panics. It is not sufficient to believe that such a power 
would not be used to that extent by human beings. Is it 
wise or patriotic to put such enormous power into private 
hands when it is not necessary? 

If it is attempted I believe it will be the beginning of 
one of the greatest financial struggles in recent history; 
one vastly more intense and important than the silver con- 
troversy ; one that will engender class hatred as never be- 
fore; and I do not want to see the republican party com- 
mitted to the wron^ side. 

It seems to me it is relatively less important what our 
money is made of so long as it is redeemable in gold and 
backed by the credit of the Federal Government, than it is 
to have its volume free from private control and manipu- 
lation and ever responsive to the varying demands of busi- 



CORPORATE CURRENCY 377 

ness. To get currency elasticity it should not be necessary 
to give individuals the power to contract when it should 
expand. Better no elasticity unless we can have one that 
will operate automatically in response to the rise and fall 
of natural demand. 

I firmly believe if a fight for private control over the 
public currency is started it will lead to an irresistible de- 
mand for a Government issue of national currency exclu- 
sively, all redeemable in gold, the volume to be regulated 
from day to day by the Federal Government. I am not 
saying that this would be wise but I think it would be 
inevitable and preferable if the alternative is private Wall 
Street control, direct or indirect, over all the money of the 
people. 

The distinguished governor of one of our largest states 
said to me that he could not believe any one would seriously 
propose such a plan. Yet the committee on resolutions at 
the National Civic Federation meeting, a majority of whom 
were Wall Street men, flatly refused in public to accept 
my amendment (to their currency resolution) which said 
merely, 'Provided, that the power to regulate the volume of 
the public currency shall not be taken from the Federal 
Government and put into private hands." 

The Aldrich currency bill when reported contained a pro- 
vision allowing sudden contraction not only of the $500,- 
000,000 of emergency currency, but also the $700,000,000 
of bank note circulation, total $1,200,000,000, or nearly half 
of all currency in circulation in the United States. 

When my petition of protest was read in open senate in 
the midst of the discussion of that bill, exposing this dan- 
gerous provision, Senator Aldrich instantly went privately 
to the Senator who introduced my petition and told him the 
Finance Committee would strike out the provision allow- 
ing the sudden contracting of the entire bank-note currency. 
But why was it put in at all ? Those who drafted that bill 
and those in whose interest many believe it was framed 
are not novices. 

There are those who believe that the Aldrich- Vreeland 
law was largely but a foil for the real measure desired and 
v^hich will be revealed only when the Monetary Commis- 
sion created by that law reports. And that the recent sig- 
nificant reorganization of certain congressional committees 
was part of a predetermined plan to force through Congress 
the mysterious measure the character of which is to be 



378 UNITED STATES MONEY vs. 

carefully concealed from the public until the last moment 
If this be true the demand of the interested promoters for 
hasty action at a special session is explained. If informa- 
tion which came to me nearly a year ago proves correct the 
Monetary Commission will report in favor of a great cen- 
tral bank. This to be given absolute control of the finan- 
cial business of the Government with exclusive power to 
issue currency ad libitum and to contract the voltune at its 
pleasure. This institution to be called a Government bank, 
but owned privately. It will be thinly sugar-coated by a 
provision allowing the President to appoint some of the 
directors. 

The chief fight then will be as to whether the institution 
shall be owned and controlled privately or by the Govern- 
ment. The republican party cannot afford to take the 
wrong side if this issue is to be forced upon the country. 
It will court disaster if it does so. 

The people were led to expect that the Monetary Com- 
mission would be open and impartial in its investigation 
and hearings, giving ample opportunity to all who might 
desire to be heard. The hearings have mostly been held in 
Europe and not in the country chiefly concerned. They have 
been as secret as a council planning a military campaign. 
Those attended who were privately invited and their names 
have been carefully concealed from the public. The people 
and press of the United States have been completely 
ignored. And now rumor says that you are to be asked to 
convene Congress in extraordinary session to receive and 
hastily act on this mysterious report, presumably that its 
plan may be enacted into law before the people have time 
to understand its provisions and their effect or to organize 
and express their opposition. 

I sincerely hope our fears are not justified, but in any 
event I am sure we can rely on the executive authority to 
protect the people against hasty and unwise financial 
legislation. 

Very respectfully yours, 

Alfred O. Crozier." 

Writer has refused to credit the published reports that 
the President's mind was being shaped by Mr. Aldrich, and 
the more serious intimation that the apparently insur- 
mountable opposition to President Taft's nomination in 1908 
was overcome by a deal that resulted in the passage of the 



CORPORATE CURRENCY 379 

Aldrich emergency currency bill, then supposed to be killed, 
the creation of the Monetary Commission with Aldrich at 
the head and democrats and republicans of his selection 
with him, the sudden change of front in Mr. Taft's favor 
of the most powerful banks and Wall Street financiers with 
the alleged understanding that if nominated and elected he 
could be depended upon at the last moment not to veto but 
to support the private central bank plan that from the start 
it has been known the commission was created to promote. 
Surely the President was not a party to any such unpatriotic 
deal even if it was made. 

If Mr. MacVeigh, a democrat, was appointed Secretary 
of the Treasury at the instance of the promoters of the 
Aldrich plan so that a prominent democrat would be in 
position to help fool Andrew Jackson democrats into be- 
lieving that the contemplated central bank is not a central 
bank, of course the President was not av/are of the scheme. 

Knowledge that the special interests never support any- 
one whom they even doubt, generally know what they are 
doing, take nothing for granted, exact in advance a most 
definite and binding arrangement, the fact that the sudden 
change of such interests at the last moment cinched Mr. 
Taft's nomination and election, the character of some of 
his chosen official advisers in the Cabinet and in Congress, 
were all incidents calculated more or less to shake one's 
confidence and cause grave doubts and fears. Hoping 
against hope, giving the "benefit of the doubt,'' we could' 
only await the raising of the curtain on the final act in the 
great drama representing the struggle of the people against 
the "interests" to discover whether the President, the sworn 
defender of the republic, the chief actor would cast his 
great influence and official power on the side of the people 
or their enemies. 

The complete confidence of Wall Street during the whole 
of the time since June, 1908, that its half -century-long 
dream of a great central money trust under its control soon 
would be realized, the formation of side-partner security 
companies by the big Wall Street banks to buy up control 
of enough other banks throughout the country to control 
the proposed National Reserve Association and many other 
acts in preparation for the feast of profits and power the 
monopoly of money and control of all credits would confer 
increased the feeling of uncertainty as to the real position 
of the chief executive of the nation. 



380 UNITED STATES MONEY vs. 

President Taft at last has officially annotmced his po- 
sition in his message to Congress on December 21, 191 1, as 
follows : 

''Monetary Reform. 

A matter of first importance that will come before G)n- 
gress for action at this session is monetary reform. The 
Congress has itself arranged an early introduction of this 
great question through the report of its Monetary Com- 
mission. This commission was appointed to recommend 
a solution of the banking and currency problems so long 
confronting the nation and to furnish the facts and data 
necessary to enable the Congress to take action. The com- 
mission was appointed when an impressive and urgent 
popular demand for legislative relief suddenly arose out of 
the distressing situation of the people caused by the de- 
plorable panic of 1907. The Congress decided that while it 
could not give immediately the relief required it would 
provide a commission to furnish the means for prompt 
action at a later date. 

In order to do its work with thoroughness and precision 
this commission has taken some time to make its report. 
The country is undoubtedly hoping for as prompt action on 
the report as the convenience of the Congress can permit. 
The recognition of the gross imperfections and marked 
inadequacy of our banking and currency system even in our 
most quiet financial periods is of long standing; and later 
there has matured a recognition of the fact that our system 
is responsible for the extraordinary devastation, waste, and 
business paralysis of our recurring periods of panic. 
Though the members of the Monetary Commission have 
for a considerable time been working in the open and while 
large numbers of the people have been openly working with 
them and while the press has largely noted and discussed 
this work as it has proceeded, so that the report of the 
commission promises to represent a national movement, 
the details of the report are still being considered. I cannot 
therefore do much more at this time than commend the 
immense importance of monetary reform, urge prempt con- 
sideration and action when the commission's report is re- 
ceived and express my satisfaction that the plan to be pro- 
posed promises to embrace main features that, having met 
the approval of a great preponderance of the practical and 



CORPORATE CURRENCY 381 

professional opinion of the country are likely to meet equal 
approval in Congress, 

It is exceedingly fortunate that the wise and undisputed 
policy of maintaining unchanged the main features of our 
banking system rendered it at once impossible to introduce 
a central bank; for a central bank would certainly have 
been resisted and a plan into which it could have been in- 
troduced would probably have been defeated. But as a 
central bank could not be a part of the only plan discussed 
or considered that troublesome question is eliminated. And 
ingenious and novel as the proposed National Reserve Asso- 
ciation appears it simply is a logical outgrowth of what is 
best in our present system and is in fact the fulfillment of 
that system. 

Exactly how the management of that association should 
be organized is a question still open. It seems to be desir- 
able that the banks which would own the association should 
in the main manage it. It will be an agency of the banks 
to act for them and they can be trusted better than anybody 
else chiefly to conduct it. It is mainly bankers* work. But 
there must be some form of Government supervision and 
ultimate control and I favor a reasonable representation of 
the Government in the management. I entertain no fear 
of the introduction of politics or of any undesirable influ- 
ences from a properly measured Government representation. 

I trust that all banks of the country possessing the 
requisite standards will be placed upon a footing of perfect 
equality of opportunity. Both the national system and the 
state system should be fairly recognized, leavinp^ them 
eventually to coalesce if that shall prove to be their tend- 
ency. But such evolution can not develop impartially if 
the banks of one system are given or permitted any advan- 
tages of opportunity over those of the other system. 

And I trust also that the new legislation will carefully 
and completely protect and assure the individuality and the 
independence of each bank to the end that any tendency 
there may ever be toward a consolidation of the money or 
banking power of the nation shall be defeated. 

It will always be possible of course to correct any fea- 
tures of the new law which may in practice prove to be 
unwise ; so that while this law is sure to be enacted under 
conditions of unusual knowledge and authority it also will 
include it is well to remember the possibility of future 
amendment. 



382 UNITED STATES MONEY vs. 

With the present prospects of this long-awaited reform 
encouraging us it would be singularly unfortunate if this 
monetary question should by any chance become a party 
issue. And I sincerely hope it will not. The exceeding 
amount of consideration it has received from the people of 
the nation has been wholly non-partisan, and the Congress 
set its non-partisan seal upon it when the Monetary Com- 
mission was appointed. In commending the question to 
the favorable consideration of Congress I speak for and in 
the spirit of the great number of my fellow citizens who 
without any thought of party or partisanship feel with 
remarkable earnestness that this reform is necessary to the 
interests of all the people." 

To avoid any possibility of doing the President injustice 
the following letter was sent : 

"Milwaukee, Wis., Dec. 22, 191 1. 
Honorable William H. Taft, 

President of the United States, 
Washington, D. C. 
Dear Sir: Referring to your financial message to Con- 
gress of yesterday, kindly advise whether it was your inten- 
tion thereby to approve specifically or in a general way the 
Aldrich plan for a National Reserve Association owned by 
the banks? 

Please also advise as to whether you will insist on a clear 
majority of the directors of such an institution being 
appointed by the Federal Government so that the Govern- 
ment will have supreme and absolute control of this private 
corporation ? 

My permanent post-office address is care of The Romaine, 
Middleton Avenue, Clifton, Cincinnati, Ohio. 
Thanking you, I remain, 

Very respectfully yours, 

Alfred O. Crozier." 

The reply to the above can not be published because it was 
marked "personal." The language of the President's mes- 
sage, however, leaves no hope that he will oppose the Aldridi 
plan or insist on Government ownership or any public con- 
trol that will be effective. The following quotations from 
letters published elsewhere in this volume in full are more 
than significant, they are eloquent: 



CORPORATE CURRENCY 383 

A letter dated December 27, 191 1, from the American 
Bankers' Association says: 

"Referring to your inquiry about President Taft's attitude, 
we have no further advices than extracts from the Presi- 
dent's message to Congress, in which it appears that he 
endorses the 'Aldrich plan'." 

The National Bank of Commerce in New York writes on 
January 3, 1912 : 

'*The writer has not before him the annual message of 
President Taft, but his recollection is that the Aldrich bill 
was favorably mentioned therein/' 



PlaaklAton Kous»» 

llil«ank««» Wis.* 

D«ar ftlri- 

Ansverine yoort of tLe 22«d» I b«6 to »ttt« 

that tft a rot».oiit address I ^allavo Prasident Taft substantially 

approrad of the Aldrieh Plan* Z do not know that his approTal 

went to every detail* but I believe it covered the general 

pro(ra« of a Oantral Reserve Assooiation. 

X believa it is olaar that publio opinion is 

•dvansing aloa^ ihesa. linet very rapidly. 

V9ty truly* 7 cure* 




The above is conclusive proof that Wall Street and the 
banks believe the President is definitely with them in the 
poming contest. They generally know, they do not guess, 
on matters so vital to their business interests. 



384 UNITED STATES MONEY vs. 

The recent published statement by Senator Burton, said to 
be a close adviser of the President, his signature to the 
Monetary Commission's report, and the warm advocacy of 
the Aldrich plan in his annual report of December 4, 191 1, 
by the Secretary of the Treasury MacVeigh, all indicate that 
the present administration is committed to the plan of taking 
away from the Government and granting to a private cor- 
poration owned by the banks all control of the public cur- 
rency *of the United States. The President argues against 
"consolidation of the money or banking power of the nation" 
and then favors the Aldrich plan that would bind all banks 
into one great money trust by act of Congress. The pending 
bill permits the Reserve Association to adopt "regulations" 
and binds each bank specifically to obey such "regulations/' 
present and future. .This gives the central bank as mudi 
power over all banks as it would have if it owned the entire 
capital stock of every bank. 

One has to twice read the President's statement that the 
National Reserve Association is in no sense a central bank 
to be certain that it was not intended as one of those famous 
presidential jokes. An3rway, Wall Street and the banks all 
had a good laugh over that statement, joke or no joke. 

The bill reported by the commission, printed herein in 
full, shows that although for prudential reasons (to fool 
Andrew Jackson Democrats), Aldrich named it "Reserve 
Association" instead of "Central Bank," the corporation is 
to have all of the ordinary functions, powers and privileges 
of Eui'opean central banks and of the central bank abolished 
by President Jackson. 

I President Taft, quoting Aldrich and Vreeland in his 
Boston speech, called it a central bank of issue. There has 
been no change in the functions of the institution since the 
New York Chamber of Commerce originated the plan in 
1906, elsewhere herein fully described. The only real change 
was in the form of management. In 1906 it was to be a 
Government Central Bank with the Federal Grovemment in 
supreme control. Now it is a private central bank with the 
banks in supreme control. Aldrich, to obscure this, has 
devised a complicated system of branch boards and for 
electing directors. He calls it a republican or democratic 
form of government but the people have no hand in it. The 
banks are the source of all power. If all public ofEdals were 
elected by vote of the corporations instead of the people it 
would be the kind of "democracy" Aldrich devised and the 



CORPORATE CURRENCY 385 

President praises for the National Reserve Association. The 
Government of 94,000,000 people chooses 4 and the bank 
fraternity 42 of the 46 directors of the central bank. The 
benefits are divided in about the same proportion. 

It is to be a private corporation with shares of stock, 
receive deposits, issue notes, have a reserve, loan its credit, 
discount paper, buy and sell bills of exchange, charge in- 
terest, accumulate a surplus, pay dividends. The President 
surely must have taken Mr, Aldrich's word, for the state- 
ment that the National Reserve Association would not be a 
central bank is untrue and ridiculous. If all banks join it 
will have over 24,000 "depositors." This central bank will 
do for such customers (the banks) all the things an ordinary 
bank does for its customers. It is a central instead of an 
ordinary bank because the banks and Government are to be 
its only customers. 

The President seemed to realize that there would be a big 
fight over the question as to whether control of the institu- 
tion shall be public or private. The people are certain to 
resist giving control of their entire money supply into private 
hands. 

But President Taft says, "It seems to be desirable that the 
banks which would own the association should in. the main 
manage it. It will be an agency of the banks to act for them, 
and they can be trusted better than anybody else chiefly to 
conduct it." 

On page 11 of the published address made by President 
Aldrich before the Economic Club of New York, issued by 
the Monetary Commission, he said : "The management of 
the Bank of England is in the hands of 24 directors selected 
largely from merchants — ^no bankers, in their sense of the 
word, being eligible for the position — ^and these, including 
the governor and deputy governor, elected by the directors 
from their own number, have control of the business of the 
bank." 

Here is the greatest central bank in the world the policy of 
which largely influences the interest rate, supply of credit 
and business conditions not only in the British Empire but 
throughout the world, and yet not one banker ever is allowed 
on* its board of directors or to occupy any position except 
as a mere hired employe. There is a reason, a fundamental 
one, that Congress should heed, for that English policy is the 
result of a century of careful experience. 

The truth is the bankers always are on one side and busi- 



386 UNITED STATES MONEY vs. 

ness men on the opposite in the game of finance. The 
bankers loan, business men borrow. Bankers charge in- 
terest, business men pay it. The banker naturally seeks to 
increase his profit by increasing interest and other charges 
and this increases the burden on business. 

But the people, consumers, pay it all, for interest and bank 
charges are expense included in the cost and increase by at 
least that much the prices of commodities. 

Big bankers in a sense are parasites on business. They 
make all their money that way. Many are good men, honest, 
fair and reasonable. Elsewhere herein it is shown that very 
many are unfair, sordid, dishonest. As a class during all 
history their avarice and rapacity has increased with their 
riches and power. They often take advantage and abuse 
popular confidence and increase their profits and the public 
burden when trusted with power and opportunity. This is 
history. It is the reason banks are barred out of the manage- 
ment of the Bank of England. It is why the good Lord 
scourged and drove them from the temple. It is why 600 
years B. C. Mohammed rebuked and broke with his uncles, 
the bankers of Mecca, for charging 100 per cent interest, 
taking the side of the poor and founding a religion that now 
has 176,000,000 followers. It is the reason why bankers 
should not be given by Congress monopolistic control of the 
public currency with exclusive power to fix the rate of dis- 
count, interest, without restraint, that all the people of the 
country must pay, the power to eliminate all competition for 
loans — ^a money trust. 

The policy of the Bank of England means that over there 
business men and merchants have more influence than 
bankers in matters of government and legislation and there- 
fore they have put a bridle on banks and bankers to make 
them serve instead of dictate to all business. Because the 
Bank of England issues the currency and regulates the 
money supply and interest rates it is managed exclusively 
by patriotic business men for the common good. They know 
that if the bankers were in control money might artificially 
be made scarce for the very purpose of increasing interest 
rates that more profits might be extorted from business men 
by the bankers. 

To put bankers, or the dummies of bankers, in control of 
the National Reserve Association is to make it certain that 
year by year the supply of money and credit will be so 
manipulated that it will impose upon legitimate business all 



CORPORATE CURRENCY 387 

over the country an ever increasing interest burden and 
expense for bank accommodations. It is all right to hire the 
best of expert bankers to do the technical work but they 
should be, as in England, rfiere employes under the absolute 
control of a board composed of broad-minded and patriotic 
business men, Republicans and Democrats, from all parts of 
the country, sworn as public servants. That is the only safe 
plan. But Aldrich and the President would turn the whole 
thing, public currency, public revenues, Government funds 
of all kinds, all the money in the United States, over to the 
absolute control of a selfish private banking syndicate so that 
no one could get a dollar for any purpose without the consent 
of the syndicate and on its terms. 

The President's argument that Congress need not hesitate 
about adopting the scheme because if it does not work well 
it can be amended is like urging a sick patient to swallow 
the unknown contents of a bottle marked "Poison" because 
if he don't like it and he finds it is likely to kill him the 
patient can just simply throw the poison up again. 

Did Aldrich get the President to insert that clever sug- 
gestion, concealing from the chief executive the amending 
clause of the commission's bill, as follows ? : 

"Sec. 58. Congress reserves the right to alter or amend 
the provisions of this act to take effect at the end of any 
decennial period from and after the organization of the 
National Reserve Association." Note the absence of the 
word "repeal" in the above section. It is nowhere in the bill. 

"Decennial" means "tenth anniversary." Congress is 
asked to bind its own hands and shackle the whole country 
for ten years, so that during that time the sovereignty of 
Government is powerless to make any change. It puts the 
central bank, the money trust, above, independent of and 
superior to law, government, the people, for ten years, and 
successive periods of ten years. Before ten years the pro- 
moters expect this money monster will have attained such 
political power that thereafter any amendments will be for 
the benefit of the banks and Wall Street instead of the 
people. This provision is typical of the whole bill, and 
reveals the grasping power of the special interests now 
bringing pressure on the whole country through the banks 
and otherwise to force it through Congress. And it strik- 
ingly reveals the unpatriotic course of the paid, sworn and 
trusted public servants of the Monetary Commissioil who 



388 UNITED STATES MONEY vs. 

seem to be trying to betray the people and the country into 
the power of the banks and Wall Street. 

This is the most insolent amending clause ever inserted in 
a bill introduced into Congress. And the Government's paid 
and sworn Monetary Commission urges its adoption. 

The first to start the cry of non-partisanship in the alleged 
hope of keeping the opponents of the Aldrich plan divided 
while the minority as a compact balance of power can be 
used to terrify both parties and extort unwilling support for 
the Aldrich plan in Congress among both Democrats and 
Republicans was Paul M. Warburg, partner in the great 
Wall Street banking house of Kuhn, Loeb & Co., said to 
represent or do business for Standard Oil and the Roths- 
childs of Europe. He, as the reputed author of the Aldrich 
plan, did this at a meeting in Wall Street of bankers and 
others held to advance the plan, as elsewhere herein fully 
shown. Mr. Aldrich took up this Wall Street cry and used 
it throughout the country and now the chief executive of 
the republic echoes it from the White House of the nation 
in his official message to Congress. 

The President's message, however, is even more remark- 
able for its omissions. When it was written the President 
had available the official report of the United States Comp- 
troller of the Currency made on December 4, 191 1. The 
Comptroller (as shown elsewhere herein in full) made the 
most astounding and terrible charges against banks and 
banlfers ever contained in a public document. He showed 
that over half of all national banks knowingly and constantly 
break the laws of the United States. He charged bankers 
wholesale with dishonesty, grafting and crime. He made his 
showing from the sworn admissions of the banks themselves 
on file in his office. He urged Congress to amend the laws, 
increase the criminal penalties, that he might be better able 
to enforce the law against the banks for the protection of 
depositors, borrowers and the public. 

Did the President support this request of the Comptroller, 
did he instruct his Attorney-General to proceed to enforce 
the law against bankers officially shown to be law-violators? 
No. But he did in that message criticize federal judges for 
shielding a few grafting clerks of federal courts and urged 
Congress to enact a law giving power of removal to the 
President as well as to the judges. 

Instead of instructing the Department of Justice to prose- 
cute the thousands of rich and powerful criminal bankers he 



CORPORATE CURRENCY 389 

puts the entire machinery of Government to work to discover 
and punish a mere handful of misguided workingmen and 
then urges Congress to turn over to these very lawless bank- 
ers for their personal profit the supreme governmental func- 
tion of issuing all public currency and the other imperial 
powers included in the Aldrich plan. Workingmen who 
break law should be punished but lawless bankers and mil- 
lionaires should be treated the same way, because they have 
violated the same identical criminal statute, the law of the 
United States. 

It is difficult to reconcile the former assertions of the 
President in his messages and public speeches that he pro- 
posed to enforce the law, every law, against all violators, 
rich or poor, individual or corporation, labor union or trust, 
without discrimination, fear or favor, with his apparent 
indifference to the constant violation of several different 
provisions of the federal law by thousands of bankers 
officially accused by the Comptroller of the United States. 

Nor is it due to any oversight or lack of information on 
the part of the President. Writer personally put into the 
President's own hands at the White House on November 
16, 19 1 1 (two weeks before the Comptroller's report was 
made public on December 4, 191 1), the written statement 
hereinbefore printed in full which contained the charge 
(based on evidence privately obtained by writer), that the 
records in the Comptroller's office showed that at least 40 
per cent of all national banks were constant and intentional 
law-breakers. 

We earnestly wish there was some possible way to explain 
or excuse this strange course of the President. Whether so 
intended or not the conduct of the present administration 
of Government and the law tends to constitute and classify 
the prosperous and powerful bankers and Wall Street finan- 
ciers as a favored class, exempt and above the law, daily 
treating the laws and the authority of Government with 
utter contempt, ignoring their sworn obligations to their 
depositors, stockholders and the public, breaking criminal 
statutes with impunity and, because of the indifference of 
the Department of Justice or the policy of the Executive, 
enjoying full immunity from penalties of forfeiture, fines 
and imprisonment. 

He has often and well said that in a republic it is dan- 
gerous to execute the laws in any but a just, equal and 
impartial manner. It cannot be that questions of mere 



390 UNITED STATES MONEY vs. 

* 

political expediency would induce the learned jurist, the 
distinguished public servant, the sworn and trusted Presi- 
dent to compound with or grant active or passive immunity 
to lawless bankers as a class because they are bankers, rich 
and politically influential, and even to urge Congress now 
to vastly increase their profits and power by law. As shown 
in another chapter there are 40,000 national bank officers 
and directors this very moment who are guilty under the 
laws of the United States of the crime of conspiracy, each 
being liable to a fine not exceeding $10,000, or imprison- 
ment not more than two years, or both, and there is ample 
evidence in the Comptroller's office and elsewhere to prove 
the charge in each case. 

Yet the Attorney-General does not act, the President is 
silent. Why? Politically speaking, events soon will show 
that if the President took his stand knowingly it was sui- 
cide; if he was deceived it was assassination. So long as 
the special interests get away with the plunder they waste 
no tears over the coffin containing the blasted poHtical hopes 
of careless or faithless public servants whom they have 
induced to betray the public welfare into their itching hands. 

GOVERNOR HARMON 

William J. Bryan says that Judson Harmon, Governor of 
Ohio, is one of the candidates for the democratic nomination 
for the presidency being secretly supported hy Wall Street. 

This may explain why Governor Harmon ignored or did 
not answer a recent courteous letter by author asking him 
whether he was in favor of the Aldrich private central bank 
bill now pending in Congress. Following is the letter : 

Milwaukee^ Wis., Dec. 18. 191 1. 
Gov. Judson Harmon, Columbus, O. 

Dear Sir: — ^The need of wise and practical banking and 
currency reform now is so important, kindly advise as to 
whether you favor the suggested National Reserve Associa- 
tion plan advocated by the National Monetary Commission. 
Thanking, you, I am, Very respectfully yours, 

Alfred O. Crozier. 



PRESS NOTICES OF "THE MAGNET'' 391 



WALL STREET! 

Alfred Owen Crozier's Great Financial Novel, 'The Magnet," 
Is Warmly Resented by Wall Street. 

The book exposes in detail the precise secret methods 
by which, with the aid of the Stock Exchange and the "tick- 
er," "high finance" manipulates quotation prices on 20 to 
30 billions of "listed" securities, and fleeces the public out 
of a billion dollars each year. Author did not expect or desire 
Wall Street's approval. 

In "The Magnet" scrapbook was found the following 
letter which is here reproduced, without consultation with 
former publisher. Author considers it evidence that "The 
Magnet" hit the right mark. 



TICKER 



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tops th«a% All 


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aoA not oaring to orltlolao It otberwlBo In our ool- 
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ghanklng joa for yanr ooortaay, we r«Daln, 

TouTB ▼ez7 tmljr, 

TRB TZOflR PUSLISBHTO CO. 



vm/iLW. 



392 PRESS NOTICES OF "THE MAGNET" 

"THE MAGNET/' 

Alfred Owen Crozier's financial novel, "The Magnet," 
has been read by Roosevelt, Taft, La PoUette, Bryan, Hughes 
and by many Congressmen, Governors, Supreme Judges, 
business men and labor leaders. It was extensively and 
favorably reviewed by the daily press and magazines (see 
press notices on following pages). La Follette spent an 
hour reading extracts from "The Magnet" to the United 
States Senate as part of his famous eighteen hour speech 
in 1908. That book was Author's "first gun" in his cam- 
paign for honest finance and a progressive and patriotic 
money policy. It was preliminary to his new volume, "U. S. 
Money vs. Corporation Currency." 

••BOOK OF THE HOUR." 

"The Magnet" is fuU of fun, thrilling situations, adven- 
tures and tender romance. The Women particularly enjoy 
it. The characters are pat, entertaining and almost recog- 
nizable. Every patriotic man should read it because of the 
startling and true revelations and exposure in detail of the 
precise methods being used by Wall Street High Finance in 
its rapid and dangerous conquest of the American Republic. 

"The Magnet" was first issued as a high class $1.50 
novel by Funk & Wagnalls Company. The manuscript, 
written in 1906, was delivered to publisher months before 
the October, 1907, panic, and yet the book contains a full 
description in detail of that panic and the way it was caused. 
Its chapter, "The Artificial Panic," was surprisingly pro- 
phetic. 

The Magnet Company is publisher of Mr. Crozier's 
new work, "U. S. Money vs. Corporation Currency." To 
enable readers of the new book to al^o obtain "The Magnet" 
at very low cost. The Magnet Company has acquired the 
plates and all rights in "The Magnet." 

These two books no doubt will be the "Uncle Tom's 
Cabin" of the present progressive crusade for the preserva- 
tion of popular government and liberation of American Bus- 



PRESS NOTICES OF "THE MAGNET" 393 

iness, Politics and banks from the present intolerable bondage 
to the panic-scotarging mastery of Wall Street High Finance. 

**U. S. Money vs. Corporation Currency" is a powerful 
book of merciless facts from the official records. ^^The 
Magnet'' is a fascinating romance woven about the private 
central bank scheme that since actually has materialized 
and now is before Congress. It is "Flesh and Blood in 
Action." It sets forth with startling and convincing realism 
the alliance between Crooked Big Business and Crooked 
"Boss" Politics, and lay^ bare the shady methods employed. 
These books were prepared at great cost by author to post 
the public and help prepare the people so they could suc- 
cessfully fight to preserve their rights and liberties. Patri- 
otic readers are earnestly asked to help extend their circu- 
lation and usefulness. Form "Clubs of Three" so as to get 
the books at the relatively nominal price, as per "Special 
Offer to Readers," set forth on inside of front cover of this 
voltmie. The campaign of 1912 is now on, so kindly act 
promptly. Help start the "endless chain." Your own 
interests are deeply involved in a wise solution of this the 
greatest issue since the Civil War. 

Send orders by mail with P. O. Money Order to 

The Magnet Company, 

Provident Bank Building, 

Cincinnati, Ohio. 



PRICES— (SINGLE COPY, POSTPAID). 

**The Magnet/' 500 pages, 7 beautiful illustrations, 
Cloth, $1.00; Paper, 50 cents. 

"U. S. Money vs. Corporation Currency,'* 400 pages, 
34 striking and timely illustrations and 30 original letters 
from big banks and financiers, etc. Cloth, 60 cents; Paper, 
30 cents. 

See Special Cut Price (inside front cover) where 3 
copies at one time are ordered accompanied by remittance. 



394 PRESS NOTICES OP "THE MAGNET' 

Baltimore American. — ^An up to the minute novel, teeming with 
the electric thrill of the last sensation in high finance and corporate 
boodling, "The Magnet" will justify its title in holding the attention 
of the reader from start to finish. It is argtiment in flesh and blood. 
It is logic in action. It is conviction upon the anvil. 

Philadelphia North American. — One of the most powerful romances 
which has appeared lately, and which goes to the very root of many of 
the current national problems. 

Philadelphia Record. — **The Magnet" is a powerftil story. Mr. 
Crozier writes with humor, originality and directness, as well as with 
force and lucidity. 

Boston Globe. — ^Rills of humor, as sparkling as real rills under the 
kiss of summer sunshine, trickle through and make fascinating the pages 
of "The Magnet." 

Detroit Free Press. — The financial side of this story is treated 
with an abandon that makes Mr. Lawson's "Frenzied Finance" seem 
mild as milk. 

Wilmington (Del.) Journal. — "The Magnet" is more than a fasci- 
nating romance. It may make its author, Alfred O. Crozier of this 
city, a national character. 

Cleveland Press. — ^Alfred O. Crozier is author of "The Magnet," 
a novel in which J. Pierpont Morgan and other familiar figures of Wall 
Street figure in thin disguise. 

Cincinnati Post. — In obtaining material for his book Mr. Crozier 
spent months studying the hidden currents and sunken reefs of Wall 

Street. 

"Wilmington (Del.) Star. — Mr. Crozier thoroughly understands 
the subject of high finance, which is the underlying subject of "The 
Magnet." Our sympathies are with him in his war with the vampires 
of the nation, as they were with Lawson, and as they are with Roosevelt, 
all three of whom by varying methods, some wise and some doubtless 
unwise, have been valiantly fighting the battle of personal and corporate 
honesty and of financial, industrial and commercial cleanliness. 

Chicago Examiner. — Mr. Crozier's new book, "The Magnet." 
though written in story form, bristles with philosophic discussions. 
Fortunately Mr. Crozier is not without the saving grace of humor, and 
some of his severest criticisms are modified by tms human touch. 

Chicago Post. — ^A grave novel of public affairs. The book is beau- 
tifully illustrated by Wallace Morgan, the originator of the celebrated 
Fluflfy Ruffles Pictures. 

Washington Times. — ^For twenty years Mr. Crozier has been a 
prominent lawyer. He is also a manufacttirer with wide business 
experience and a student of financial and political affairs. For five 
years he was treasurer of the National Conference of Charities and 
Corrections of the United States. He started the modem movement 
for a Delaware Ship Canal and the Atlantic Coast inland waterway 
from Cape Cod to Carolina. He was an influential delegate at the 
recent National Rivers and Harbors Congress at Washington and at 
the Waterways Convention, Philadelphia. 

Detroit News. — "The Magnet" was written by a former resident 
of Grand Rapids, Michigan. The story centers in Wall Street and 
some of the characters are almost recognizable by their names. 



PRESS NOTICES OP '^THE MAGNET" 395 

Minneaiiolis Joamal. — ^Alfred O. Crozier, lawyer, manufacturer 
and man of wide experience has given another evidence of his versatility 
by writing a novel. It is called The Magnet* ' and gives voice to views 
which caused something of a sensation at a recent meeting of the Na- 
tional Civic Federation. 

Detroit Times. — "The Magnet, " by Alfred 0. Crozier, is a powerful 
and fascinating romance, interspersed with philosophic humor. 

St. Louis Republic. — "The Magnet," by Alfred O. Crozier, should 
find many readers. It is a romance of the battles of modem financial 
giants, great financial matters being dovetailed into a pretty love 
story. The book is written in a new and original style, and is designed 
to appeal to the serious minds of all thoughtful Americans. 

Cleveland Leader. — "The Magnet," by Alfred O. Crozier, is cer- 
tainly one of the most appropriate books for the times. At a time 
when the country has been suffering from a lack of currency it is inter- 
esting to read an account of how one man was able to get all the gold 
under lock and key and actually get his hands on so nearly all of the 
rest of the currency that the cotmtry was nearly frenzied. Of course 
it all became a grand problem for the President, Cabinet and Congress, 
to struggle with. The metaphysical struggle with Sterling Morton, 
the man who actually cornered the money, is better read than described. 
There is an interesting love story running through the book. 

Augusta (Me.) Herald. — One of the most conspicuous publications 
of the hour is the new novel by Mr. Crozier which is in reality an ar- 
raignment of the evil forces at work in Wall Street. 

Chicago Tribune. — Mr. Alfred O. Crozier, an attorney of Wilming- 
ton, Delaware, has written a novel called "The Magnet" which attacks 
Wall Street and its methods. Mr. Crozier is the member of the Civic 
Federation who so badly baited August Belmont at the meeting in New 
York a month or so ago. 

S:ansas City Star.— -"The Magnet" is by Alfred O. Crozier, a dis- 
tinguished lawyer of Wilmington, Delaware, who has decided views 
on Wall Street's "panic making machine" and the other manifestations 
of modem finance. 

Grand Rapids (Mich.) Herald. — Mr. Crozier has studied his sub- 
ject from several view points. It should be read to be appreciated, for 
an outline of the plot does not give the fullness of the tale. 

Seattle (Wash.) Post-Intelligencer. — Mr. Crozier has written a 
polemical novel whose ideas may be gleamed as follows: "Congress 
should go slow on currency legislation. The recent artificial panic was 
to scare the country into forcing Congress to act <}uickly and blindly. 
Selfishness instead of patriotism seems to be the inspiration of every 
proposition emanating from banking sources. They want elasticity, 
a rubber currency. This means simply the power to expand and con- 
tract the volume of money. But in every plan the banks demand the 
exclusive right to exercise this dangerous power. They are unwilling 
to let the people's government have any say." Mr. Crozier is much in 
earnest and very z^ous. 

New York Sun. — ^There is a passage in "The Magnet" describing 
Wall Street at page 55, which makes us think that Mr. W. J. Bryan 
must have read the book before making his speech at Carnegie Hall 
last Tuesday evening. 



396 PRESS NOTICES OF "THE MAGNET" 

Montreal (Canada) Witness. — "The Magnet" can not fail to arouse 
at least a determination to discover how much of truth is contained in 
its vigorous and fearless denunciations. 

St Louis Christian Advocate. — ''The Magnet" is a book of 497 
pages, and in matter is a strongly written romance, really thrilling in 
many of its scenes and incidents. It is intended to expose the crooked 
ways that mark the methods of Wall Street and corporations generally, 
and in a powerful climax shows what may come to pass under existing 
conditions. We recommend the book as worthy. 

Brooklyn Eagle. — Mr. Crozier is a lawyer of Wilmii^on, Delaware, 
and a student of finance. He certainly knows Wall Street in all its 
ramifications, and is not afraid to speak out against it, as he proved 
about a month ago, when he attacked high rates of interest and margin 
gambling at a meeting of the National Civic Federation. 

Dallas (Texas) News. — ^The serious minded will feel repaid to plod 
through "The Magnet" for the unquestionable value of its revelations. 
It strips naked that hideous panic making agency, the destroyer of 
confidence and credit, the wrecker of fortunes and happiness, the 
enemy of society, humanity and the republic — ^Wall Street. 

Cleveland Town Topics. — ^No other work of fiction will be published 
within the twelve months which will prove so absorbing, so powerful, 
so revealing — ^which will touch so boldly upon so vital a subject as 
"The Magnet." It is a book which deals with financial problems and 
with no weak or uncertain touch. There has been no hesitancy in the 
mind of the man who wrote it, no hedging of facts, no cringing to the 
powers that be. Those who enjoy fiction of the higher class and of 
the most absorbing interest should read this book. Having once 
opened it they will become bound by its spell. 

New York World. — Our novelist (Mr. Crozier) sets out to popu- 
larize the^arguments against the Wall Street Gamble, and he does this 
with eloquence and force.* 

Louisville (Ky.) Western Record. — "The Magnet" was an agreeable 
surprise. The story is one of great interest, one's attention is closely 
held. Yet the indictment against many of the methods of modem 
finance is strong and clearly put, so that the average man who knows 
little of these things can understand. How Mr. Crozier managed to 
make such an absorbing story out of his dry and unpleasant facts re- 
mains a mystery. 

Madison (Wis.) Journal. — The evils of Wall Street gambling, 
elastic currency schemes, political conspiracies, etc., are laid bare in a 
new Novel by Alfred O. Crozier. Many of the reforms urged by Pres- 
ident Roosevelt in his last message to Congress, were previously incor- 
porated in this book. 

Charleston (S. C.) News and Courier. — In his book, Mr. Crozier 
has written in powerful and fascinating way about a question of intense 
practical moment, weaving into his romance a great deal of delightful 
philosophic uumor, and telling the story in a new and most onginal 
way of he conditions which so nearly affect not only the business life 
of the country, but its social and domestic happiness as welL 

Omaha World Herald.— The author of "The Magnet" states that 
he has written the book with the hope that it may induce public thought 
and discussion, and thus do some good by helping to defeat the designs 
of lawless and incorporated wealth. 



PRESS NOTICES OF "THE MAGNET' 397 

Portland Oregonian. — "The Magnet" is a cleverly constructed 
audacious Novel. 

Albany (N. T.) Argus. — Mr. Crozier has been creating sensations 
in financial circles and columns of interviews in the newspapers, with 
his radical views on Wall Street and the worship of the Golden Calf. 

The Banker, Chicago. — ^The recent Boston address (before the 
City Club) on banking topics by Alfred O. Crozier, has attracted atten- 
tion anew to his powerful novel, "The Magnet." Crozier is a bom 
enemy of the trusts and his fighting blood was up, a la Sterling, when he 
wrote this wonderful story of Sterling the promoter, Helen Morton and 
John Hays. As a description of a venture in high finance it is worttiv 
of a place in any library. It teaches a useful lesson for those who risk 
all for money. The plot and counterplot are clever, with a grand 
climax and a moral victory to conclude. Buy it and read it. 

Des Moines (la.) Register and Leader. — "The Magnet" is a de- 
light to the jaded reader who has wearied of the conventional and pur- 
poseless drivel which seems to have usurped the romantic market. 
Mr. Crozier, first of all, writes with a defined object in view. His 
theme is drawn from important public questions ot today. 

Glasgow (Scotland) News. — Read in the light of the recent 
money crisis in the United States, "The Magnet " is well calculated 
to cause grave searchings of heart among those who realize how 
much of ttie world's future is bound up with the developments — 
political and financial — of that country. It is decidedly dry read- 
mg, but it is deeply instructive. 

Indianapolis News. — ^The author of "The Magnet" possesses a 
great mass of useful and timely information. 

Milwaukee Sentinel. — "The Magnet," by Alfred O. Crozier, is a 
powerful novel, dealing with current afifairs, containing a fascinating 
romance and illustrated by Wallace Morgan. 

Dayton (Ohio) Watchword. — ^Whether the resignation of General 
Dupont as head of the Speaker's Bureau of the Republican National 
Committee was voluntary or was forced by President Roosevdt will 
probably remain a secret. In this connection, however, it is significant 
that a few days previous to the General's resignation President Roose- 
velt received a communication from Alfred O. Crozier, the Wilmington 
lawyer, whose book, "The Magnet," has caused such a sensation in 
political and financial circles. He called attention to the serious handi- 
cap that General Dupont's presence upon the executive committee was 
likely to exert upon Mr. Taft's election. 

Detroit Advocate. — ^The author has original views on various sub- 
jects. It will set one thinking to read Mr. Crozier's book. 

New York Christian Herald. — "The Magnet" is a timely romance 
of the battles of modem business giants and the fatuity of living merely 
to acctunulate material riches. 

London (England) Globe. — "The Magnet," by A. O. Crozier, comes 
from America, and proves to be yet another novel lustily lashing the 
trans-Atlantic overweening craze for making money by any means, 
honest or dishonest, and showing how it demoralizes the national 
character. American financiers and other worshippers of the almighty 
dollar have no lack of mirrors in which to see their unlovely s^es. 
The story ends with a novel act of restitution. 



398 PRESS NOTICES OP "THE MAGNET' 

Detroit Times. — *'The Magnet" is certain to attiract attention and 
make its impress on the coming Nation£ll Campaign. 

Colorado Springs Gazette. — Unlike Lawson, Crozier is not a spec- 
ulator, and his insight into Wall Street affairs has not been gained in a 
rough-and-tumble mix-up in the battles of the street. His has rather 
been the attitude of the student and the investigator. For years he 
has studied the game as it is played, until the study has become his 
hobby, his passion. He fairly oozes statistics. To illustrate the accu- 
racy of his knowledge of the trend of banking and currency affairs, one 
of the chapters in his novel, "The Magnet," although written more 
than a year ago, describes with remarkable fidelity the recent money 
panic, giving m detail, months in advance of their actual occurrence, 
many of the facts which are now a part of current financial history. 

Portland Bulletin. — ^The characters in the story are splendidly 
portrayed, and reveal some excellent word drawings on the part of the 
author. The private schemes in Congress regarding elastic currency 
are laid bare. The methods and powers of Wall Street are exposed. 
The author of "The Magnet" tells how panics are created, and their 
effect. He also tells of methods regarding the regulation of railroadsand 
trusts and other kindred subjects. This book is well worth perusal, 
not merely for its romance but for its timeliness, in so far as present 
political and industrial conditions are concerned. 

Syracuse Herald. — Mr. Crozier has written a novel of modem 
business, in which men talk in billions, and the merger has been carried 
to the ultimate. The author says the book is not a reservoir of pana- 
ceas, but he hopes it may induce public thought. 

San Francisco News-Letter. — ^At dose range, Mr. Lawson may 
present a prettier picture to the eye — ^his graces of person, his immacu- 
late taste m dress, with its touch of the esthetic in the always conspic- 
uous boutonniere, being well known, but when it comes right down to 
physical bulk, Crozier makes an impressive eyeful. He is a fair speci- 
men of what we have come to expect a fighter should look like. When 
standing on the ground, he stretches in straight, solid fashion nearly 
six feet into the air. The scale would probably register his weight at 
225 pounds. His head, surmounted with a stiff growth of that peculiar 
copper wire hair which we are wont to associate with unusual ^vsical 
strength, tops off a face that is as grim and relentless as a Pilgrim 
Father's. Two lean, muscular jaws jutting away, like the sides of a gun- 
boat, from a somewhat long and inquisitive nose, terminate in a firm 
and knotty chin. In platform speech these jaws snap shut at impres- 
sive intervals, and it is then that uie man's strength and fixity of purpose 
is revealed at its best. A dose friend says his eyes are gray. Perhaps 
they are, but if so, they are the coldest, steeliest pair of gray eyes ever 
set into a man's head. If you or me were to be pulled suddenly from a 
dark room into the light, our eyes would blink and blurr until they be- 
came accustomed to the changed condition. Perhaps Crozier's eyes 
would act likewise, but they do not convey that impression. They 
strike one as eyes that would gaze at you steadily and unblinkingly 
under almost any conditions. 

Boston Globe. — "The Magnet" is the mapc and attractive title 
of an up to the minute novel by Alfred O. Crozier, published by Punk 
& Wagnalls Company. In a style which holds the interest of the reader 
from beginning to end the author deals in a logical, convincing and 
entertaining way with high finance and boodUng. 



PRESS NOTICES OP ''THE MAGNET' 399 

New York Christian Observer. — In this novel ("The Magnet") 
of nearly 600 pages the machinery of Wall Street is uncovered to the 
public eye, revealing its diaboUcal methods and the tragedies that 
result. 

Fourth Estate, New York.— "The Magnet" is a book of 500 pages, 
so magnetic, so fascinating that the reader, having once begun it, will 
not be ready to lay it aside, tmtil he has finished it. The story is one 
of so called high finance, related in a captivating style. An overwhelm- 
ing desire to secure the power which wealth is supposed to give possesses 
a man of apparently strong character, who is described as playing a 
desperate game to obtain the control of national finance. 

Love, hatred, fear, intrigue and other passions skillfully interwoven 
play their parts. Fortunately love gains the ascendency over the greed 
for gold, and a moral victory is won. Traits of American life and man- 
ners are graphically pictured in this romance of the battle of giants 
that figiu'e in modem finance. 

New York Commercial. — Mr. Crozier lives in Wilmington, Dela- 
ware, is a well known lawyer and is also a successful manufacturer. 
He is intensely in earnest, and this very earnestness gives him a poise 
and ease of demeanor that never desert him, even under trjdng cir- 
cumstances. During the recent meeting of the National Civic Federa- 
tion in New York, at which were present Andrew Carnegie, August 
Belmont, Seth Lowe, Samuel Gompers and scores of other notable 
fip[ures in American public life, the discussion had ambled along in a 
dignified and orderly, if somewhat desultory manner until near the 
dose of the meeting, when Crozier slowly arose from his seat, and in his 
characteristic way fired a question at Belmont. The question was sim- 
ple in itself, but it was not just the kind of question that members of 
that august body were accustomed to have put so bluntly, and it created 
a stir. A battery of well bred stares was focused in Crozier's direction, 
but it did not quail him. He serenely waited his answer — ^and he got 
it. The incident is characteristic of the man. He impresses you as 
one who will get what he goes after. 

Although not indorsing all the conclusions reached by Mr. Crozier 
President Roosevelt, with whom Mr. Crozier has conversed on the 
subject uppermost in his mind, is following a similar line of reasoning, 
as is evidenced in the President's recent remarkable special message to 
Congress. 

New York American. — ^Alfred O. Crozier, the big Wilmington 
(Del.) lawyer, who furnished the three "explosions," which made the 
recent convention of the National Civic Federation the liveliest in its 
history,^ did not speak his whole mind on the sins of Wall Street and 
capital in the Federation session. 

On Monday he chastised Wall Street as a panic making machine, 
and made some of the big financiers present squirm. Tuesday he 
* 'stood up" August Belmont on the charge of capitalizing franchises, 
and wrune from him his first public defense of the interborough Metro- 
politan Merger. He then tried to inject a "saving clause' into the 
elastic currency resolution proposed by Isaac N. Seligman. 

Since he startled the staid Civic Federation there has been no little 
curiosity as to just who Crozier is. He comes from New York stock 
and was bom in Grand Rapids, Michigan. He graduated from the 
University of Michigan in 1886 and has been a lawyer for twenty 
years. 



400 PRESS NOTICES OF "THE MAGNET' 



f* 



San Francisco CaU. — In the opening chapter of "The Magnet, 
which antedates the story about 30 years, the upbuilding of the plot is 
well outlined. 

New York Tribune. — ^Alfred O. Crozier, the Delaware delegate to 
the National Civic Federation, who was appointed to draw up resolu- 
tions of thanks to retiring President August Belmont, together with 
Isaac N. Seligman, after he had tilted with both of them at Monday's 
and Tuesday s meetings, is anxious to bring about an organized effort 
to do away with margin sales and call loans at exorbitant rates of in- 
terest. Mr. Crozier said last evening that only by these means did he 
think that panicky conditions could be securdy guarded against. 

New York World. — ^A bomb was dropped into the placid councils 
of the National Civic Federation yesterday and the echo of its explosion 
had not ceased to reverberate at the annual dinner, held last night at 
Hotel Astor. 

The man who had the temerity to raise this stonn was Alfred O. 
Crozier, of Wilmington, Delaware, a lawyer and the author of '*The 
Magnet, ' ' a book attacking Wall Street. Face to face he told the finan- 
ciers they caused the money panic. 

New York Herald. — ^August Belmont, chairman of the Boards of 
Directors controlling the surface lines and traction facilities above and 
beneath the earth in New York City , made the longest impromptu speech 
of his life yesterday in defending traction companies and mergers. 

He took the position that, since the obligation to operate cars was 
laid so heavily upon the corporation, the employee also should be made 
to feel, when he accepted a position with the transportation company, 
that he was in the service of the public and should not be permitted 
to leave his post without notice. 

"Mr. Bdmont," asked Mr. Crozier, "if an employee entering the 
employment of a public service corporation at a modest wage thereby, 
incurs an obligation as a servant of the public, should not the corpora- 
tion which receives the franchise from the public free — ^a franchise which 
is not property, but a mere license — should it not also have an obligation 
to the public and be prevented from capitalizing that franchise for 
$100,000,000 and then charging the pubhc higher rates so as to pay 
dividends on such capitalization?" 

Mr. Belmont was astonished by the long hypothetical inquiry and 
a wave of red swept over his face. Some of the labor element in the 
room applauded Mr. Crozier. 



Many more press notices from other leading papers and 
magazines, and strong endorsements of "The Magnet" by 
men prominent in public life, could be given, but space will 
not permit. 

To many, Mr. Crozier seems to be an extreme radical, 
but the fact is he is a cautious and careful conservative. 
His radicalism is only the radicalism of naked truth, whidi 
he states blimtly and alwa3rs without qualification or apology. 
He believes the time to temporize with dangerous national 
evils has passed, and that the only way to prevent the swing 
of the pendidum to a dangerous extreme is to quickly estabn 



PRESS NOTICES OP "THE MAGNET' 401 

lish justice and a square deal in finance, business and politics 
and between capital and labor. That is all he seete. He 
would not harm any legitimate business, big or Uttle, not 
even that of Wall Street. But he thinks the only way to 
safeguard legitimate business is to destroy the evils. 

Mr. Crozier and family went to Cincinnati, Ohio, be- 
catise of the unsurpassed school system of that city, and that 
his two daughters might complete their education in the 
splendid university and art school of that town. 

He also has established there the headquarters of his 
Cement Products Company that supplies special machinery 
and erects plants for the manufacture of brick with ordinary 
**wet process'' cement-concrete imder the "Crozier system" 
of which he is inventor and principal owner, the product 
being known as "Crozite" stone and brick. 

But for years Mr. Crozier constantly has pushed the 
non-partisan progressive campaign for the preservation of 
popular rule and to retain in the people and their govenmient 
control of the country's supply of money. He has freely 
and gladly expended very many thousands of dollars and 
years of time and personal effort in making the investiga- 
tions and collecting the information now made public for the 
common good. The relatively nominal price put on his new 
book has been made possible by him. If Congress instead 
of adopting the "Aldrich Plan" will take up the "Crozier 
Plan" for a U. S. Monetary Council it will prove a great and 
lasting national blessing. 

THE MAGNET COMPANY. 



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